Key Stats for Hershey Stock
- Past-Week Performance: +2.4%
- 52-Week Range: $150 to $239.5
- Current Price: $215.2
What Happened?
Thirty-percent-plus earnings growth from a confectioner best known for Halloween candy marks one of the sharper profit recovery arcs in packaged food, as Hershey (HSY), maker of Reese’s peanut butter cups and many more, guides 2026 diluted EPS up 30% to 35% off a trough carved by cocoa prices that briefly exceeded $12,000 per metric ton in late 2024, with shares trading at $215.20 against a 52-week low of $150.04.
On February 5, CEO Kirk Tanner and CFO Steve Voskuil delivered Q4 2025 results that beat internal gross margin expectations by roughly 250 basis points, driven by tariff savings on supplier materials that came in well below forecast, as FY2025 diluted EPS reached $10.92, up 20.5% on net sales of $11.69 billion.
Hershey’s salty snacks segment, which houses better-for-you brands like SkinnyPop popcorn and Dot’s Pretzels and now represents a meaningful growth engine alongside core chocolate, posted 18% organic growth with double-digit volume gains in Q4 2025, a category performance that outpaced the broadly flat salty snacks market and lifted Dot’s to the number one position in the U.S. pretzel category.
On March 16, Hershey announced its first-ever consolidation of sweet, salty, and protein portfolios under a single U.S. operating structure, appointing Nitin Jain as Chief Strategy and Transformation Officer and expanding U.S. President Andrew Archambault’s remit to cover the entire domestic portfolio.
CFO Steve Voskuil stated on the Q4 2025 earnings call that “cocoa is up just a little versus 2025” and that hedges placed today for 2027 “would mean that we’d have deflation between ’27 and ’26,” tying directly to management’s plan to sustain gross margin recovery beyond the guided 41% in 2026.
Hershey’s path to a post-recovery identity rests on three dated pillars: a March 31 Investor Day in New York where management will detail a multi-year innovation pipeline across protein and functional snacking, a full-year Hershey’s and Reese’s brand campaign marking the first joint push in eight years, and a cocoa cost structure that management expects to become a tailwind in 2027 as below-market hedges roll in, all while dividend growth resumes and share buybacks return to the capital allocation conversation.
Wall Street’s Take on HSY Stock
The cocoa shock that dragged normalized EPS down 34.2% from $9.59 in FY2023 to $6.31 in FY2025 is now reversing, with TIKR estimates projecting a 32.9% rebound to $8.39 in FY2026 and a further climb to $9.84 in FY2027 as below-market cocoa hedges roll into the cost structure.
That recovery path rests on EBITDA margins expanding from a trough of 21.2% in FY2025 to 24.5% in FY2026 and 27.2% in FY2027 per TIKR estimates, fueled by pricing already fully sold in and salty snacks organic growth of 18% in Q4 2025 that requires no additional commodity exposure.
Fourteen of 26 analysts covering HSY sit at buy or outperform, three hold a buy rating, three hold an outperform, seventeen hold, one underperforms, and one sells, with the mean price target of $230.61 implying modest 7.2% upside from $215.20, a consensus that reflects cocoa uncertainty still on the books rather than the deflation management now describes as increasingly certain for 2027.
The gap between the Street’s mean target of $230.61 and TIKR’s mid-case of $319.61 is substantial, with the bull end of analyst estimates at $267.00 anchored to successful execution of the March 31 Investor Day plan and continued elasticity discipline, while the bear floor of $165.00 assumes pricing elasticity accelerates beyond the 0.8 assumption management has conservatively embedded in guidance.
What Does the Valuation Model Say?
The TIKR mid-case target of $319.61, implying 48.5% total return at an 8.6% IRR over 4.8 years, assumes a 3.1% revenue CAGR and a net income margin recovery to 16.3%, both of which find direct support in management’s 4% to 5% net sales guidance and the salty snacks segment’s structural volume momentum that delivered double-digit growth even through a cycle of above-inflation pricing.
The market prices HSY as a mature chocolate company still digesting a commodity shock, but normalized EPS of $6.31 in FY2025 already reflects peak cocoa pain, and the 32.9% EPS rebound expected in FY2026 alone makes that framing a year out of date.
SkinnyPop’s category relevance and Dot’s Pretzels’ number one pretzel position demonstrate that Hershey’s non-chocolate portfolio, which generated 18% organic growth in Q4 2025, provides a structural volume compounder that the Street’s $230.61 mean target does not fully price; the TIKR model’s $319.61 target does.
CFO Steve Voskuil’s confirmation that cocoa hedges placed today for 2027 imply deflation versus 2026 levels signals that the earnings recovery is not a one-year event but a multi-year rerating catalyst the consensus has not yet absorbed.
If price elasticity on chocolate exceeds the embedded 0.8 assumption, the 30% to 35% EPS growth guided for FY2026 compresses and the TIKR model’s FY2027 normalized EPS estimate of $9.84 becomes unreachable, stalling the rerating entirely.
The March 31 Investor Day in New York is the single near-term confirmation event: watch for management to quantify the 2027 cocoa hedge position and provide a normalized EPS framework, the two inputs that either validate or challenge the TIKR model’s $319.61 mid-case.
Should You Invest in The Hershey Company?
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