I like Hershey
Top-line growth was anything but spectacular -- Hershey eked out a minuscule 1.2% net sales gain for the first quarter. Net income decreased 20% to $0.40 per diluted share.
Adjusting for business realignments, net income was unchanged at $0.51 per diluted share. That's about what Wall Street expected the company to do -- which means that Wall Street wasn't happy.
When dealing with a blue-chip brand like Hershey, however, I would say to forget short-term woes and focus on long-term potential. This isn't to say that the quarter's lacking performance should be ignored. Hershey's fundamentals definitely have room for improvement.
Hershey is in a bad phase. This past February, Rick Munarriz mentioned in one of his look-back pieces that the confectioner was in the midst of laying off well over a thousand workers. There was also some bad guidance issued in December. In addition, I found, while covering one of the earnings reports last year, that Hershey wasn't necessarily wowing the shareholders.
Recently, some merger talk has surrounded the company. Cadbury Schweppes
I think Hershey remains a viable long-term idea on its own, even with its current growth problems, since it owns a valuable portfolio of famous consumer brands that generates a good amount of cash. The confection industry has some strong names out there, such as Wrigley
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Fool contributor Steven Mallas owns none of the companies mentioned. After writing this, he is in the mood for a Mounds bar. As of this writing, he was ranked 14,635 out of 27,496 investors in the Motley Fool CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.