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Key Takeaways from Hershey’s First Quarter

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Stock rises on strong quarter

Hershey (HSY) stock rose 4.6% yesterday following the company’s stellar first-quarter results. Hershey exceeded analysts’ sales and earnings estimates, and its profit margins expanded. Volume growth, incremental sales from acquisitions, and higher pricing supported its top line, while currency volatility impacted its sales growth.

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Improved volumes, pricing, raw material costs, and cost savings drove Hershey’s first-quarter profit margins, whereas higher packaging and logistics costs pressured them. In the first quarter, higher sales and margin expansion drove Hershey’s bottom line, which beat Wall Street’s expectation and marked double-digit percentage growth. A lower outstanding share count and adjusted effective tax rate further cushioned its earnings. Management reiterated its guidance and expects net sales to rise 1%–3% in 2019, and pricing and productivity savings to boost profit margins.

Stock performance

Hershey stock had risen 14.2% this year as of yesterday. In comparison, improved sales and productivity savings have boosted Conagra Brands (CAG), General Mills (GIS), and J.M. Smucker (SJM) by 44.9%, 29.0%, and 29.7%, respectively. Meanwhile, the S&P 500 has risen by 16.7%.

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