The Hershey Company (HSY -0.10%) is slated to report its first-quarter 2022 results before the market open on Thursday, April 28. An analyst conference call is scheduled for the same day at 8:30 a.m. ET.
Investors in the confectionary and salty snack-food maker will probably be approaching the report with optimism. Last quarter, the company beat the Wall Street consensus estimates for revenue and earnings, resulting in investors driving shares up 2.7%. Indeed, the company exceeded earnings estimates in all four quarters of 2021.
In 2022, Hershey stock has returned 17.2% through April 14, compared with the S&P 500's negative 7.5% return over this period. This outperformance is attributable to the company's recent robust results along with investors favoring stocks in sectors that tend to hold up well in inflationary environments, such as consumer staples.
Hershey's key quarterly numbers
|Metric||Q1 2021 Result||Wall Street's Q1 2022 Consensus Estimate||Wall Street's Projected Change|
|Revenue||$2.30 billion||$2.48 billion||7.8%|
|Adjusted earnings per share (EPS)||$1.92||$2.09||8.9%|
For context, last quarter, Hershey's sales rose 6.4% year over year to $2.33 billion, surpassing the $2.27 billion Wall Street had expected. Reported net income was $335.6 million, or $1.62 per share, up 17%. Adjusted earnings jumped 13% to $1.69 per share; that result beat the $1.61 analyst consensus estimate.
Last quarter's sales growth was driven by the company raising its product list prices across its three segments (North America confectionary, North America salty snacks, and international) and by acquisitions. Price increases contributed 6.1% to total year-over-year revenue growth. Acquisitions made within the last year (Pretzels Inc., Dot's, and Lily's Sweets) contributed 2.2% to revenue growth, while foreign exchange added 0.2%. Sales volume declined 2.1%, but this was in part due to fewer shipping days in the quarter relative to the year-ago period.
Last quarter's results reflect solid pricing power, which isn't surprising because Hershey has many top brands.
Investors hope to see continued improvement in the international segment, which is Hershey's weak link. Last quarter, this segment -- which accounted for 8% of total sales --- posted a loss, while the two North America businesses were quite profitable. But the good news is that the international business' loss narrowed significantly from the year-ago period.
Last quarter, management issued revenue and earnings guidance for full-year 2022. The market should react favorably if management notably increases its outlook. (Investors probably don't need to be concerned about management lowering the annual guidance, as it reiterated it in late February; moreover, it's very early in the year.)
For 2022, the company expects annual revenue growth of 8% to 10%. Of this total, 4% to 7% is expected to be organic growth, while acquisitions made within the last year are anticipated to contribute 3% to 4%. The company expects sales growth to be driven primarily by price increases across all segments.
Also, for the year, Hershey is projecting reported EPS growth of 7% to 10% and adjusted EPS growth of 9% to 11% year over year.