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Hershey’s Q4 Results Could Drive Its Stock Higher

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Hershey’s Q4 results

Hershey (HSY) is scheduled to announce its fourth-quarter results on January 31. Hershey is expected to report improved results on the sales and margins front. The company’s bottom line will likely grow at a stellar rate.

Hershey’s organic sales could improve sequentially and on a YoY (year-over-year) basis in the fourth quarter, which reflects higher volumes and new product launches. However, the pricing could remain weak in North America, which might hurt the organic sales growth. Hershey is expected to realize higher pricing in 2019, which is positive. Hershey’s gross margins are also expected to improve sequentially. The company faces easy comps on a YoY basis.

Higher sales and improved margins are expected to support Hershey’s fourth-quarter earnings. The lower effective tax rate will likely drive the EPS growth.

Analysts expect Hershey to post healthy financials for the fourth quarter. Analysts also expect the company to post higher sales and earnings. However, inflation in commodities, negative currency rates, and trade spending could have a negative impact on Hershey.

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Stock performance in 2019

So far, packaged food companies’ shares have recovered steeply in 2019. General Mills (GIS), J.M. Smucker (SJM), Kraft Heinz (KHC), Mondelēz (MDLZ), and Campbell Soup (CPB) stock have risen 11.0%, 12.3%, 9.9%, 7.7%, and 7.3% as of January 23.

In comparison, Hershey stock has risen 1.1%. The company’s improved fourth-quarter performance and an expected increase in net pricing could support Hershey shares in 2019.

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