The Hershey Company (HSY 0.09%) is slated to report its second-quarter 2022 results before the market open on Thursday, July 28. An analyst conference call is scheduled for the same day at 8:30 a.m. ET.
The confectionary and salty snack-food maker has turned in a string of better-than-expected quarterly reports. Last quarter's revenue easily beat the Wall Street consensus estimate and earnings crushed it. Moreover, last quarter, management raised its full-year guidance for both the top and bottom lines. So, investors are likely mostly optimistic about the upcoming report.
That said, some investors also might be somewhat concerned about the impact of the challenging macroeconomic environment on the company's results. Inflation remains high, the labor market remains tight, and pandemic-driven global supply chain issues persist to some degree.
So far, the company's price increases to offset higher product input and labor costs and other pressures on its profits have not dampened consumers' appetite for its products. Hershey's strong pricing power isn't too surprising because the company owns many top brands that have been consumer favorites for generations, including its namesake brand, Reese's, Kit Kat, and Twizzlers, along with newer brands that consumers love, such as SkinnyPop Popcorn.
In 2022, Hershey stock has returned 14.6% through July 8, while the S&P 500's return is 17.5% in the red. It's a solid dividend stock, currently yielding about 1.6%.
Image source: Getty Images.
Hershey's key numbers
| Metric | Q2 2021 Result | Wall Street's Q2 2022 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|
| Revenue | $1.99 billion | $2.22 billion | 12% |
| Adjusted earnings per share (EPS) | $1.47 | $1.68 | 14% |
Data sources: Hershey and Yahoo! Finance.
For context, last quarter, Hershey's sales rose 16% year over year to $2.67 billion, easily topping the $2.48 billion Wall Street had expected. Net income under generally accepted accounting principles (GAAP) was $533.5 million, or $2.57 per share, up 35%. Adjusted earnings jumped 32% to $2.53 per share, crushing the $2.09 analyst consensus estimate.
Last quarter's sales growth was due to a 6.9% increase in average product price, a 4.6% increase in product volume, and a 4.6% benefit from the acquisitions of Pretzels Inc., Dot's, and Lily's Sweets.
Sales growth was robust across segments. North America confectionery's sales rose 12% year over year to $2.2 billion; the acquisition of Lily's contributed 1.1% to this growth. North America salty snacks' sales soared 86% to $226.1 million, with the acquisitions of Dot's and Pretzels contributing 69%. And the international segment's sales jumped 18% to $223.1 million.
Full-year 2022 guidance
Last quarter, management raised its full-year 2022 guidance for both revenue and earnings. It hiked its outlook range for the top line by 2%, and its outlook range for the bottom line (both GAAP and adjusted for one-time items) by 1%.
The stock should react favorably if management increases its guidance again, especially on the bottom line.
| Metric | Initial Guidance | Updated Guidance |
|---|---|---|
| 2022 annual revenue growth | 8% to 10% | 10% to 12%* |
| 2022 annual GAAP EPS growth | 7% to 10% | 8% to 11% |
| 2022 annual adjusted EPS growth | 9% to 11% | 10% to 12% |
Data source: Hershey's. *Acquisitions made within the last year are anticipated to contribute 4% to 5% to revenue, up from the initial guidance of 3% to 4%.
