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Hershey (HSY) stock rallied after the company released first-quarter earnings Thursday. By the end of the session, the stock had climbed over 7% to close at $48.08. A new high was reached at one point: $48.23. As can be seen, the market is solidly behind the famous confectioner and its quarterly report.
The top line increased just under 14%. The bottom line, on a GAAP basis, came in at 64 cents per share, nearly 100% better than the 33 cents per share earned in the year-ago period. On an adjusted basis, net income growth was 68% because of some charges added back to that 33-cent profit stat. This was, nevertheless, a great performance: The analysts were only expecting somewhere around 47 cents per share.
This report was a nice follow-up to the previous earnings release. Hershey not only beat estimates at that time as well, but it increased the dividend payout.
The management team is positioning the company's various candy items in a correct manner. According to BusinessWeek, a commitment to marketing initiatives helped to score some pretty powerful results. Execs should strive to keep up the smart planning in this area so that the momentum can continue. That's the challenge: You don't want to let the consumers forget about the trademarks.
I don't think consumers will forget. I foresee a good year for the company. And while the stock is a little high right now based on valuation, it's got a decent dividend yield (approximately 2.7% based on yesterday's closing price).
As with Kellogg (K) and Kraft (KFT), the best strategy for an equity based on popular food franchises and significant brand equity is: Buy, hold, dollar-cost-average, reinvest dividend. A simple algorithm. At the moment, I am not interested in trading Hershey.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
4-23-2010 @ 2:06PM
kcordillo said...
When Hershey brings its company back to US soil and hires its US citizens to run the factory I will buy its products. until then they can sink from sight