Key Takeaways:
- Resilient 2026 Outlook: The Hershey Company projects 4% to 5% sales growth and EPS of $8 to $9 for 2026, while targeting $230 million in efficiency savings to offset cocoa volatility and protect margins near 23%.
- Margin Recovery Plan: Hershey Company expects gross margin inflection in Q2 2026 after a 17-point compression to 37%, supported by pricing actions of 9% and disciplined cost control despite volumes declining 3%.
- Price Target Framework: Based on 3% revenue growth and 23% operating margins, The Hershey Company stock could reach $274 by 2028 using a 24x multiple aligned with its 5-year average of 25x.
- Modeled Upside: The Hershey Company trades at $231 today, and a $274 target implies 19% total upside, translating into a 6% annualized return over the next 3 years under conservative margin assumptions.
Breaking Down the Case for Hershey Co.
The Hershey Company begins 2026 with guidance for 4% to 5% sales growth and adjusted EPS of $8 to $9, positioning the business for earnings recovery despite cocoa volatility and residual tariff costs.
Fiscal 2025 closed with Q4 net sales of $3 billion, up 7%, adjusted EPS of $2, and gross margin compressing 17 points to 37% as elevated cocoa costs weighed on profitability.
Full-year revenue approached $12 billion with operating margins near 23%, reflecting pricing of 9% that offset a 3% volume decline while supporting $320 million in quarterly net income.
Management expects $230 million in incremental efficiency savings in 2026 alongside a low single-digit decline in cost of goods sold, reinforcing internal cost discipline amid continued commodity hedging above current market prices.
Furthermore, reinforcing the company’s 2026 guidance framework, CEO Kirk Tanner stated during the Q4 2025 earnings call, “We’re looking at 4% to 5% net sales growth and meaningful earnings recovery.”
Shares trade at 29x forward earnings versus 25x three months ago, while Wall Street’s median $200 target sits below the current $231 price, creating valuation tension as fundamentals stabilize into 2027.
What the Model Says for HSY Stock
Hershey combines 4.4% recent revenue growth with 23.2% operating margins, while cocoa volatility and a 52% share gain elevate expectations and compress valuation flexibility.
The model assumes 3.3% revenue growth, 22.6% operating margins, and a 24.3x exit multiple, producing a $274.49 target price by 12/31/28.
That implies 18.9% total upside from $230.85 and a 6.2% annualized return, below a 10% equity hurdle rate for consumer staples risk.
Therefore, the model signals Sell, as a 6.2% annualized return fails to compensate for commodity volatility and a 24.3x multiple already reflecting recovery.
Projected 6.2% annualized return falls short of a 10% equity hurdle rate, and 3.3% revenue growth with 22.6% margins capitalized at 24.3x produces limited capital appreciation and weak risk-adjusted compensation.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for Hershey stock:
1. Revenue Growth: 3.3%
The Hershey Company delivered 4.4% revenue growth over the past year and 7.5% over 5 years, yet category maturity and pricing normalization constrain sustained acceleration.
Q4 2025 revenue increased 7% to $3.1 billion and adjusted EPS beat estimates by 22.1%, while full-year EPS guidance of $8.20 to $8.52 signals earnings stabilization.
Analysts expect 30.7% adjusted EPS growth in 2026, though that rebound reflects recovery from a weaker 2025 base rather than structural demand expansion.
The 3.3% growth assumption requires steady pricing and volume retention across confection and pantry items, and elasticity pressure or commodity spikes would compress incremental gains.
Revenue growth and margin stability must align, and modest top-line delivery limits valuation support when shares already trade at elevated multiples.
The 3.3% revenue assumption sits below the 1-year growth rate of 4.4%, and the model therefore embeds moderation as Hershey stock absorbs a 52% 12-month advance.
2. Operating Margins: 22.6%
The Hershey Company generated 23.2% operating margins over the past year and 22.5% over 5 years, reflecting brand pricing power and disciplined cost control.
EBIT margin reached 23.2% in 2024, while EBITDA margin of 27.2% shows scale efficiency despite revenue growth of only 0.3% that year.
Cocoa volatility and residual tariff exposure create cost pressure, and sustained margin delivery requires pricing offsets without material volume erosion.
The 22.6% assumption presumes cost containment and mix stability, and even small input cost surprises would pressure earnings against a 24.3x capitalization.
Growth and margin assumptions compound each other, and stable margins alone cannot offset subdued 3.3% revenue expansion.
The 22.6% margin forecast stands under the 1-year operating margin of 23.2%, and the model therefore builds in slight compression as pricing power normalizes.
3. Exit P/E Multiple: 24.3x
The exit multiple of 24.3× capitalizes normalized earnings as durable consumer staples cash flows rather than cyclical peak profits.
Market assumption for 2026 NTM Price / Normalized Earnings stands at 27.61×, and the model discounts that level to reflect slower 3.3% growth and margin normalization.
Shares have surged 52% over 52 weeks and trade near 27.61× forward earnings, while consensus mean target of $203.52 implies limited valuation expansion.
The 24.3× multiple assumes earnings durability at 22.6% margins, and any revenue shortfall would trigger multiple compression rather than expansion.
This is below the 1-year P/E of 29.6×, indicating the model assumes valuation normalization as Hershey stock reverts toward historical consumer staples ranges.
What Happens If Things Go Better or Worse?
Hershey stock hinges on pricing power, cocoa cost control, and sustained brand demand, shaping expectations through 2030.
- Low Case: If cocoa inflation persists and pricing weakens, revenue grows 2.7% and net margin holds 15.4% with valuation pressure → 2.6% annualized return.
- Mid Case: With steady pricing and cost discipline, revenue growth near 3.0% and margins at 16.4% support stable valuation → 6.7% annualized return.
- High Case: If volume recovers an
How Much Upside Does Hershey Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
