Hershey Improves Q4 Profit and Quarterly Payout

Make no mistake: Hershey isn't the most exciting investment idea out there. No one necessarily does a victory dance for a less than 7% increase in the bottom line.

However, the company has a lot of great brands at its disposal, and judging by the press release, it knows that the need to keep gross margins healthy, as well as maintaining brand equity, is of prime importance. A difficult economic balance to strike, but the confectioner is doing okay in this regard. In addition, the issue of price elasticity came up. Pricing strategies may be tricky, but I'm glad management is experimenting in this area; better prices for the portfolio at retail will help future shareholder value.

Here's some more good points to consider. According to The Wall Street Journal (subscription required), cash flow is healthy, and management decided that Cadbury PLC (CBY) was no longer interesting. Don't feel bad, though, because TheStreet.com says Kraft (KFT) has now succeeded in purchasing the business behind Trident and the famous Cadbury Creme Egg.

I'm glad Cadbury wasn't purchased by Hershey. As far as I'm concerned, it's best for the latter to concentrate on growing its own products instead of integrating a new portfolio. Yes, Cadbury does have some valuable trademarks, but I would rather see Hershey simply focus on cash flow and dividend increases. Unfortunately, I may become ultimately disappointed, since the Journal piece mentioned that an acquisition/merger strategy was still a future possibility. Time will tell.

Shares of Hershey aren't experiencing much of a kick in afternoon trading, but at the stock's current yield, it's not a bad buy for a multi-year holding period.

Disclosure: I don't own any company mentioned; positions can change without notice.