What happened

Shares of Hershey Co (NYSE:HSY) were looking sweeter today after the candymaker reported strong second-quarter results, driven in part by its recent acquisition of Amplify Brands, the parent of Skinnypop popcorn, and growth in its core chocolate brands. 

As of 11:44 a.m. EDT, the stock was up 6.4%.

A melting chocolate bar

Image source: Getty Images.

So what

Overall revenue in the period increased 5.3% to $1.75 billion, slightly ahead of estimates at $1.74 billion, which management credited to strong performance from Amplify, solid growth in the international business, and continued investment in its domestic core brands. The company also divested two smaller foreign brands, Tyrrells and Golden Monkey, in order to focus on its core brands and growing savory snack division.

Despite that revenue growth, adjusted gross margin was down 260 basis points to 44.5%, though that matched expectations due to higher freight and logistics costs, unfavorable sales mix, and other expenses. However, selling, marketing, and administrative expenses grew just 1.4%. As a result, adjusted earnings per share increased 5.6% to $1.14, better than analyst expectations at $1.10.

"I am very pleased with the ongoing transformation of our international business with solid organic growth, meaningful profit improvement, and the successful divestitures of Tyrrells and Golden Monkey," said CEO Michele Buck. The company also announced a $500 million share repurchase authorization and increased its dividend 10% to $0.722, which gives the stock a dividend yield of 2.9%.

Now what

Hershey lowered its full-year overall revenue guidance from 5%-7% to the low end of the 3.5%-5.5% range to account for the recent divestitures of Tyrrells and Golden Monkey. However, the company maintained organic revenue guidance of slightly up to 2%, and reaffirmed adjusted earnings guidance at $5.33 to $5.43, up 14% to 16% from a year ago, due in part to a benefit from a lower tax rate.

Despite the general headwinds in candy and sweets, the company is executing and successfully integrating Amplify. The stock deserves a bump after today's news.

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