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The Hershey Company (HSY) Trade Card™

The Hershey Company (HSY)
115.96 0.65 (0.56%)
Sector: Food, Beverage and Tobacco
Published by Capital Market Laboratories on 2017-05-26

What does this rating mean?
STOCK RETURNS
3Mo: +6.5%   |   6Mo: +18.7%  |   12Mo: +25.8%

TECHNICAL RATING
10DMA: $110.9  |  50DMA: $108.8  |  200DMA: $104.0
What does this rating mean?

Fundamentals     

➜ HSY generates $1.1137 in revenue for every $1 in expense, which is above the sector average of $1.08.

➜ HSY generates $414,000 in revenue per employee which is below the sector average of $624,000.

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HSY has seen revenue (TTM) rise over both one- and two-years by 2.9% and 0.0%, respectively. Revenue in the most recent trailing-twelve-months is $7.49 billion. Last year HSY reported $7.28 billion and two-years ago annual revenue was $7.49 billion.

The average estimate for next quarter's revenue of $1.90 billion is above last quarter's $1.88 billion.

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Technicals   |   Support: 107.07   |   Resistance: Stock is Through Resistance   

Golden Cross Alert: The 50-day MA is now above the 200-day MA.
Swing Golden Cross Alert: The short-term 10 day MA is now above the 50 day MA.

HSY has a five bull (top rated) technical rating because it's trading above its 10-, 50-and 200- day moving averages and the stock is up on the day.


Earnings Estimates
Earnings Date
2017-04-25
EPS
$1.26
Revenue (Mean)
$1.90 billion
Revenue (Median)
$1.90 billion
Last Quarter (Actual)
$1.88 billion


Fundamentals Rating Summary


Metric Current 1yr Ago 2yr Ago Direction
Revenue (TTM US$ Millions)Rising 7,491 7,278 7,488 Rising

Operating Margin (QTR)Falling 1.11 1.23 1.25 Falling

Net Income (TTM US$ Millions)Rising 588 498 839 Rising

Levered Free Cash Flow (TTM US$ Millions)Falling -851 628 1,020 Falling

Capital Expenditures (TTM US$ Millions)Trending Lower 261 336 354 Trending Lower




Stock Returns and Chart


HSY is up +6.5% over the last three months and up +18.7% over the last six months. The stock price is up +25.8% over the last year.

Before we dig into the fundamental trends that drive the rating, let's look at a two-year stock chart with regression channel and 10-day momentum (on the bottom).

Note: You can change time horizons by clicking the or buttons near the bottom of the chart. You can examine a one minute day trading chart by clicking the at the top left corner of the chart.

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Now let's examine the visualizations of the critical financial measures.


Enter Symbol


METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 7,4917,2787,488Rising

Revenue over the trailing twelve months (TTM) for HSY is rising. For the most recent (annual) period the company reported $7.49 billion from $7.28 billion a year ago, or a 2.9% change. The two-year change in revenue (TTM) is $3 million (a 0.0% change).

What do all these numbers mean?
HSY's fundamental rating benefited these results:
1. The one-year change was positive (but no extra points were given for a large percentage increase).
2. The two-year change was positive.

Let's look at Revenue (TTM US$ Millions) in the chart below.


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Enter Symbol



METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Operating Revenues/Operating Expense 1.111.231.25Falling

Operating Revenues/Operating Expense
Operating revenue over operating expense simply shows us how much revenue (in dollars) is generated for every dollar of expense. The ratio must be (at a minimum) above 1.0 in order for a company to turn an operating profit. For the latest quarter HSY showed a ratio of 1.11.

What do all these numbers mean?
A year ago Operating Revenues/Operating Expense was 1.23. In the last year we can see operating margins are decreasing but are greater than 1.0 for the most recent period.

HSY's fundamental rating was affected from the operating margin numbers in two ways:
1. The current value is above 1.0 (the firm generates an operating profit).
2. The one-year change was negative (lowers the rating a little bit).

Let's look at Operating Revenues/Operating Expense in the chart below with the total assets in the orange line.


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Revenue per Employee


Before we turn to earnings and cash flow analysis, let's look at a different view of revenue on a scatter plot with peers for some perspective.

On the x-axis we equal space the companies and on the y-axis we plot revenue per employee (TTM) in $millions. For this chart, the upper right hand corner is "best" and the lower left hand corner is "worst." The company with the top revenue per employee is marked in green.

HSY 's value is $414,000 million per employee (find it on the y-axis).



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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Net Income (TTM US$ Millions) 588498839Rising

Net Income (after tax profit) over the trailing twelve months (TTM) for HSY is rising. For the most recent trailing-twelve-months (TTM) the company reported net income of $588 (million). That's an increase in the most recent year from $498 (million) or a 18.15% change.

In our next chart we plot Net Income (TTM US$ Millions) in the blue bars and the quarterly results in the gold line. Note the rising bars from a year ago (four quarters ago).


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Levered Free Cash Flow (TTM US$ Millions) -8516281,020Falling

Levered Free Cash Flow (TTM US$ Millions) is a critical determinant of stock price since market cap is the present value of all future free cash flows. For HSY the metric is falling (it was $628 million last year). For the most recent trailing-twelve-months the company reported Levered Free Cash Flow (TTM US$ Millions) of $-851 million.

This cash metric is down $-1,871 million from $1,020 million two-years ago.

For our next chart we plot Levered Free Cash Flow (TTM US$ Millions) in the blue bars through time. Note the falling bars from a year ago (four quarters ago).


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Capital Expenditures (TTM US$ Millions) 261336354Trending Lower

Capital Expenditures (TTM US$ Millions) is trending lower meaning that for at least five consecutive quarters, it's been dropping. Several consecutive drops in capital expenditures may be a red flag for a trend of under investment in the future. Note the trend in the chart below.

Capital Expenditures (TTM US$ Millions) in the most recent quarter for HSY was $261 million. CapEx is falling (-22.11%) from last year's value of $336 million. Further, we can see that CapEx today relative to two-years ago is decreasing (-26.18%) from last year's value of $354 million.

In our final time series chart we plot Capital Expenditures (TTM US$ Millions) in the blue bars. Note the falling bars from one-year ago.


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