Hershey (HSY +8.22%) shareholders are feeling sweet today. A challenging operating environment in 2025 looks to be in the rearview mirror. The company reported strong fourth-quarter results today, but 2026 guidance may be why shares soared as much as 10% this morning.
As of 12:35 p.m. ET, Hershey stock remained up by 7.2%.
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Profitability in focus
Investors bid up Hershey shares for several reasons today. Fourth-quarter results gave investors a peek into a business in recovery. Soaring cocoa prices last year hit Hershey's profitability hard. The latest results show profit margins are ramping back up, however. Management also gave investors a rosy outlook for continued progress in that area throughout 2026.
Organic sales increased 5.7% in Q4, representing faster growth than earlier in the year. Adjusted gross margin was 38.3%, a nice increase from 31.8% reported in the third quarter. During its conference call for investors, management also said investors should expect the full-year 2026 adjusted gross margin to increase to 41%.
NYSE: HSY
Key Data Points
That was great news for investors. Price increases and lower cocoa prices are driving the recovery in the company's profitability. There is also room for expenses to drop further as hedged cocoa purchases roll to lower prices. That should result in 2026 adjusted earnings per share increasing 30% to 35% versus 2025.
Hershey also saw lower-than-expected tariff costs on some supplier materials, helping to drive gross margin higher. A 6% dividend increase was one last bit of sweet news from Hershey. It's no wonder shares soared today.
