Is Hershey Stock Underperforming the Nasdaq?

Pennsylvania-based The Hershey Company (HSY) manufactures and sells confectionery products and pantry items in the U.S. and internationally. With a market cap of $38.8 billion, Hershey operates through North America Confectionery, North America Salty Snacks, and International segments.

Companies worth $10 billion or more are generally described as "large-cap stocks," Hershey fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the confectionery industry. It is famously known for its chocolates, biscuits, and candies.

However, it's not all rainbows and shine, HSY stock has plunged 19.3% from its 52-week high of $211.92 touched on May 14, 2024. Meanwhile, HSY has declined 7.1% over the past three months, performing slightly better than the Nasdaq Composite’s ($NASX) 11.3% drop during the same time frame.

Over the longer term, Hershey’s performance looks much grimmer. HSY plummeted 13.9% over the past six months and 13% over the past 52 weeks, significantly underperforming the NASX’s 45 bps uptick over the past six months and 8.5% returns over the past year.

To confirm the bearish trend and recent reversal, HSY has remained mostly below its 200-day moving average since late September 2024 and traded above its 20-day moving average since early February with some fluctuations.

Hershey’s stock prices surged 4.4% after the release of its impressive Q4 results on Feb. 6. Driven by strong momentum across its segments, the company’s net sales increased 8.7% year-over-year to $2.9 billion. Furthermore, driven by derivative MTM gains, net price realization, higher volumes, improved supply chain productivity, and benefit from the inventory valuation method, Hershey’s gross margin expanded by a staggering 11.7% to 54%. Moreover, the company also focused on reducing its SG&A expenses, which led to a massive 102.3% year-over-year growth in operating profits to $939.1 million. Meanwhile, the company delivered a solid 33.2% year-over-year growth in adjusted EPS to $2.69, exceeding the consensus estimates by more than 13%.

However, Hershey has underperformed its peer Mondelez International, Inc.’s (MDLZ) 12.6% drop over the past six months and 9.4% decline over the past 52-week period.

Despite the solid performance in the recent quarter, analysts remain cautious about Hershey’s long-term prospects. The stock has a consensus “Hold” rating among the 22 analysts covering it. As of writing, HSY is trading significantly above its mean price target of $156.67.