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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Hershey Company (XNYS:HSY) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
HSY
Name:
THE HERSHEY COMPANY (XNYS:HSY)
Sector:
515.40M
Industry:
Confectioners
CEO:
Ms. Michele Buck
Total Employees:
16,620
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 0.00% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE HERSHEY COMPANY(HSY) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND CONFECTIONERS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
224.05
One Month Price Target:
$224.48
Six Month Price Target :
$226.63
Likely Price in One Year's Time:
Ticker:
$229.21
Likely Trading Range Today Under (Normal Volatility)
$223.58
Price Upper limit ($) :
$224.85
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$216.5
This week:
$207.16
This month :
$190.28
Other Primary facts
Market Cap:
45.66B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
204.98M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
10.46%
-16.53%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$259.06
$242.77
$189.04
$205.33
Medium risk (<10%) entry points
Buy Call
Sell Call
$237.47
Buy Put:
Sell Put:
$234.00
$210.58
$214.10
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
HSY
Sharpe Ratio:
3.82%
Comparison:
HSY, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 48.61% higher than the industry
& ratio is 67.76% higher than the market/S&P 500 average
Average Returns/Yield of
HSY
Daily returns:
0.07%
Weekly returns:
0.36%
Monthly returns:
1.46%
Yearly returns:
12.32%
Comparison of returns:
Average annual returns/yield (last 3 years) is 42.18% above industry average
Classification:
HSY, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.79
Statistical test of Returns:
HSY has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.68%
Weekly Volatility:
3.75%
Monthly Volatility:
7.50%
Yearly Volatility:
25.98%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.20%
Volatility in last five trading days has been -28.27% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.37%
Weekly VaR:
-7.54%
Monthly VaR:
-15.07%
How Much Can the price of
HSY
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-12%
Worst case (decline):
-52.22%
This translates to price declining to:
$196.06
This translates to price declining to:
$107.05
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
HSY is a 6.39% riskier investment compared to the market/S&P 500 & is -8.85% less risky than Nasdaq(IXIC)
Risk (measured by volatility) is 3.14% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
HSY
Beta in relation to market/S&P 500--0.34
Expected beta in 1 year's time:
0.446
Expected beta in 3 year's time:
0.631
Unlevered (debt free) Beta:
0.152
Beta in relation to Nasdaq (XNAS):
0.434
Beta in relation to all global stocks::
0.617
Beta Comparison & Analysis
Beta of competitors/peers::
0.743
Beta is -53.90% lower than peers
Average Industry Beta:
0.475
Beta is -27.90% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
31.60%
Sustainable growth rate is 56.29% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.120
Alpha is 103.25% above industry average alpha yield
Alpha is 765% higher than market/& is unsustainably high
Analysis of Cost of Capital of
HSY
Equity cost of capital:
0.055
Equity cost of capital is -14.18% below industry mean WACC
Unlevered (without debt) cost of capital:
2.45%
Before-tax cost of debt:
2.38%
After-tax cost of debt:
1.88%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.88%
WACC is -20.15% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$45.57
Revenue growth rate per share of (3Y):
15.75
Annual revenue growth rate is 19.54% above the industry average
EPS:
$6.92
Expected Annual growth rate of EPS (3Y):
8.03%
Expected future EPS growth rate is 30.33% higher than the Confectioners industry
Free cash flow (FCF) per share:
$7.58
Balance sheet equity growth per share: 27.78%
Equity growth rate per share is -15.82% lower than the industry
Debt per share
$21.47
EBITDA per share
$11.76
Valuation Analysis Today of
HSY
P/E Ratio:
28.51
P/E Ratio of Competitors/Peers:
23.4
P/E ratio is 21.85% higher than main peers & is 19.59% higher than the industry
Stock price/value with industry average P/E ratio: $164.99
HSY is 35.80% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $120.32
Present value of the expected future dividends only: $94.22
P/S (Price to Sales ratio):
4.92
Price to sales ratio is 30.42% above the industry mean
P/B (Price to book value ratio):
15.75
Price to free cash flow: 29.54
Price to free cash flow ratio is -20.02% lower than the industry
Net income growth rate (3Y):
31.47%
Net income growth rate is 1.03% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 11.21%
Dividend yeild: 1.61%
Previous Dividend: $0.90
Previous adjusted dividend: $0.90
Previous Dividend: $3.60
Expected next dividend best case: $0.95
Expected next dividend worst case: $0.85
Average dividend payment (long-term): $0.83
Average dividend increase/decrease (growth rate) % per period: 1.61%
Expected next dividend payment date: 13/09/2022
Expected next dividend record date: 18/08/2022
Expected next dividend declaration date: 26/07/2022
Previous dividend payment date: 15/06/2022
Previous dividend record date: 20/05/2022
Previous dividend declaration date: 27/04/2022
Dividend History:
2022-05-19--$0.90
2021-11-18--$0.90
2021-05-20--$0.80
2022-02-17--$0.90
2021-08-19--$0.90
2021-02-18--$0.80
Dividend growth rate is -84.04% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
150.95%
Net debt to equity ratio:
170.66%
Debt to assets ratio:
41.34%
Net debt to assets ratio:
46.74%
Debt-to-asset ratio is -37.03% below industry average
Ability to repay debt:
Interest coverage ratio:
19.08
Interest coverage ratio is 13.88% more than industry average
Looking forward:
Debt growth rate:
11.51%
Annual debt growth is 160% higher than industry average debt growth rate
Debt repayment rate in last quarter: 1.49%
Analysis of Key Statistics
Correlation of price movement with the market:
0.603
Statistical significance of correlation:
HSY has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.665
Stock price is -9.38% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.665
Correlation of price movement with Nasdaq (^IXIC):
0.061
Covariance of price movement with the market:
0.06
Kurtosis
22.26
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-1.528
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
HSY
Gross Profit Margin Ratio:
182%
Operating Profit Margin Ratio:
23.68%
Operating profit margin is 50.60% higher than the industry
Net Profit Margin Ratio:
182%
Effective Tax Rate:
17.39%
Effective tax rate is -22.23% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
55.40%
Return on equity (ROE) is 46.13% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
15.17%
Return on assets (ROA) is 47.32% higher than the industry
Financial Leverage:
1.7x
Current Ratio:
0.96
Current ratio is 16.87% above industry average
Cash Conversion Cycle (days):
-5.9
Cash conversion cycle is -106.19% below industry average
The remaining useful life of property plant & equipment is: 1.4 years
Stock based compensation to net income ratio:
0.95%
In-depth Efficiency Analysis
Revenue generated per employee:
562.1K
Each employee generates 21% more revenue than industry average revenue per employee
EBITDA generated per employee:
145.0K
Each employee generates 25% more EBITDA than industry average revenue per employee
Profit generated per employee:
97.2K
Each employee generates 29% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
31.0K
Each employee generates 44% more free cash flow than industry average revenue per employee
Assets/Capital per employee
492.6K
Each employee generates 44% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
HSY
Ambev SA (XNYS:ABEV)
SYSCO CORPORATION (XNYS:SYY)
GENERAL MILLS, INC. (XNYS:GIS)
THE KROGER CO. (XNYS:KR)
CONSTELLATION BRANDS, INC. (XNYS:STZ)
CONSTELLATION BRANDS, INC. (XNYS:STZ)
TYSON FOODS, INC. (XNYS:TSN)
KIMBERLY-CLARK CORPORATION (XNYS:KMB)
BF-B
Current Analyst Ratings
Strong buy�13%
Buy�8%
Hold�50%
Sell�8%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
4/3/22
Revenue:
9.34B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
5.10B
4.25B
-
-
2.03B
-
-
2.03B
2.18M
126.34M
328.14M
2.41B
2.21B
1.62B
1.96B
341.01M
1.62B
Statement of Cash Flow
Date:
Period:
91.04M
Differed Income Tax :
5.06M
Stock Based Compensation :
15.34M
Change in Working Capital :
- 16625.00K
Accounts Receivables:
- 189621.00K
Other Working Capital:
- 3718.00K
Other Non-Cash Items:
28.18M
Net Cash Provided by Operating Activities:
656.47M
Investments in PP&E:
-
Net Acquisitions:
- 22503.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
4/3/22
2022
Q1
338.06M
-
338.06M
868.43M
1.03B
219.45M
2.46B
2.95B
2.62B
2.31B
109.38M
42.82M
159.93M
8.19B
-
10.65B
825.23M
912.59M
79.64M
-
827.81M
2.57B
4.40B
468.45M
5.16B
-
7.73B
221.55M
3.07B
- 242009.0K
- 135411.00K
April 3, 2022 at 6:00:00 AM
7.13B
2.92B
10.65B
-
5.31B
5.0B
-
- 141463.00K
- 163966.00K
- 66690.00K
-
- 203350.00K
- 181084.00K
- 12330.00K
- 463454.00K
- 20258.00K
8.79M
338.06M
329.27M
656.47M
- 141063.00K
515.40M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
HSY
2023
2024
2025
2026
2027
$240.28
$245.81
$251.47
$257.26
$263.18