The Hershey Company (HSY) is the largest producer of quality chocolate in North America. It is a global leader in chocolate, sugar confectionery, and chocolate-related grocery products, operating under 80 brands in 70 countries worldwide.
Hershey was incorporated in 1927 as a successor to a business founded by Milton Hershey in 1894. Milton Hershey is the first American to develop a formula for manufacturing affordable milk chocolate. The company went public in 1978.
For fiscal 2014, which ended December 31, 2014, the company earned net sales and net income of $7.4 billion and $847 million, respectively. Over the last five years, Hershey reported a CAGR (compound annual revenue growth rate) of 7%. After being in business for so long, many mature companies struggle to maintain the revenue growth rate like this. Hershey expects to achieve net sales target of $10 billion by 2017 through M&A (mergers and acquisitions).
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP.
Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
In this series, we’ll analyze the company’s business fundamentals and investment valuation, comparing the company’s performance to others in the industry like Mondelez International (MDLZ), Barry Callebaut AG (BYCBY), Nestle (NSRGY), Rocky Mountain Chocolate Factory (RMCF), Tootsie Roll Industries (TR), and Mars.
Continue to the next part of this series for a closer look at Hershey’s leadership in the US confectionary industry.