Hershey Earnings: The Streak is Snapped, Tops Street

S&P 500 (NYSE:SPY) component The Hershey Company (NYSE:HSY) reported its results for the third quarter. Hershey manufactures chocolate and confectionery products, food and beverage enhancers and gum and mint refreshment products.

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The Hershey Company Earnings Cheat Sheet

Results: Net income for the food-confectionary fell to $176.7 million (77 cents per share) vs. $196.7 million (86 cents per share) a year earlier. This is a decline of 10.2% from the year-earlier quarter.

Revenue: Rose 7.5% to $1.75 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: The Hershey Company reported adjusted net income of 87 cents per share. By that measure, the company beat the mean estimate of 86 cents per share. It beat the average revenue estimate of $1.42 billion.

Quoting Management: “The Hershey Company delivered another good quarter of core brand growth driven by solid performance within key retail channels,” said John P. Bilbrey, President and Chief Executive Officer, The Hershey Company. “Importantly, Hershey U.S. candy, mint and gum (NYSE:CMG) retail takeaway for the 12 weeks ended October 6, 2012, in the expanded all outlet combined plus convenience store channels (xAOC+C-store), which accounts for approximately 90 percent of our U.S. retail business, was up 5.9 percent, resulting in a market share gain of 1.1 points. Our performance was solid in the convenience and dollar store channels with volume and unit trends positive. Overall, Hershey’s results were balanced as we gained xAOC+C-store market share within all segments of CMG. I’m particularly pleased with our chocolate marketplace performance where we gained 0.4 market share points driven by core brands and new products. Our CMG volume and unit trends at retail continue to progress and we expect sequential improvement in the fourth quarter. Additionally, Halloween sales are off to a good start with solid programming, merchandising and promotions being executed in the marketplace.”

Key Stats:

Last quarter’s profit decrease ends a four-quarter streak of profit increases. In the second quarter, net income rose 4.4% from the year earlier, while the figure increased 24.1% in the first quarter, 4.9% in the fourth quarter of the last fiscal year and 9.2% in the third quarter of the last fiscal year.

Revenue has risen for the last four quarters. Revenue increased 6.7% to $1.41 billion in the second quarter. The figure rose 10.7% in the first quarter from the year earlier and climbed 5.7% in the fourth quarter of the last fiscal year from the year-ago quarter.

For three consecutive quarters, the company has topped analyst estimates. It beat the mark by 5 cents in the second quarter and by 15 cents in the first quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to 75 cents per share from 73 cents. Over the past three months, the average estimate for the fiscal year has climbed from $3.22 per to share to $3.23.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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