Hershey Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Hershey (NYSE:HSY) will unveil its latest earnings on Thursday, October 25, 2012. Hershey manufactures chocolate and confectionery products, food and beverage enhancers and gum and mint refreshment products.

Hershey Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 86 cents per share, a rise of 2.4% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 91 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 86 cents during the last month. Analysts are projecting profit to rise by 14.5% compared to last year’s $3.23.

Past Earnings Performance: The company has beaten estimates the last two quarters and is coming off a quarter where it topped the forecasts by 5 cents, reporting profit of 66 cents per share against a mean estimate of net income of 61 cents. In the first quarter, the company exceeded forecasts by 15 cents with profit of 96 cents versus a mean estimate of net income of 81 cents.

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Wall St. Revenue Expectations: Analysts predict a rise of 8% in revenue from the year-earlier quarter to $1.75 billion.

A Look Back: In the second quarter, profit rose 4.4% to $135.7 million (59 cents a share) from $130 million (56 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 6.7% to $1.41 billion from $1.33 billion.

Stock Price Performance: Between August 23, 2012 and October 19, 2012, the stock price had fallen $2.28 (-3.1%), from $72.61 to $70.33. The stock price saw one of its best stretches over the last year between June 11, 2012 and June 20, 2012, when shares rose for eight straight days, increasing 5% (+$3.34) over that span.

Key Stats:

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 4.9% in the fourth quarter of the last fiscal year and 24.1% in the first quarter before increasing again in the second quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 5% in the third quarter of the last fiscal year, 5.7% in the fourth quarter of the last fiscal year and 10.7% in the first quarter before increasing again in the second quarter.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.45 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.52 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 9.3% to $1.45 billion while assets rose 4% to $2.09 billion.

Analyst Ratings: There are mostly holds on the stock with 11 of 15 analysts surveyed giving that rating.

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

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