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Hershey Company (The) (HSY) Trade Card™

Hershey Company (The) (HSY)
108.04 -0.47 (-0.43%)
Sector: Food, Beverage and Tobacco
Published by Capital Market Laboratories on 2017-11-22

What does this rating mean?
STOCK RETURNS
3Mo: +0.3%   |   6Mo: -4.2%  |   12Mo: +10.6%

TECHNICAL RATING
10DMA: $108.7  |  50DMA: $108.2  |  200DMA: $108.4
What does this rating mean?

Fundamentals     

➜ HSY generates $1.2754 in revenue for every $1 in expense, which is above the sector average of $1.10.

➜ HSY generates $414,000 in revenue per employee which is below the sector average of $591,000.

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HSY's revenue (TTM) has risen for more than five consecutive quarters. One year ago the firm reported $7.38 billion in revenue. For the most recent year it reported $7.55 billion (a 2.3% one-year rise). Two-years ago the firm reported annual revenue of $7.49 billion (up 0.8%).

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Technicals   |   Support: 107.42   |   Resistance: 110.1   

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

HSY has a two bull (low rating) technical rating because it's trading below the 10-day (short-term), 50-day (medium-term) and 200-day (long-term) moving averages. The fact that the 10-day MA is above the 50-day MA ("swing golden cross") does bring the technical rating up from the lowest rung.


Earnings Estimates
Earnings Date
2018-02-02
EPS
$1.06
Revenue (Mean)
$
Revenue (Median)
$
Last Quarter (Actual)
$2.03 billion


Fundamentals Rating Summary


Metric Current 1yr Ago 2yr Ago Direction
Revenue (TTM US$ Millions)Trending Higher 7,546 7,379 7,487 Trending Higher

Operating Margin (QTR)Rising 1.28 1.23 1.18 Rising

Net Income (TTM US$ Millions)Falling 692 817 502 Falling

Levered Free Cash Flow (TTM US$ Millions)Falling -1,443 803 557 Falling

Capital Expenditures (TTM US$ Millions)
Falling
250 287 376
Falling




Stock Returns and Chart


HSY is up +0.3% over the last three months and down -4.2% over the last six months. The stock price is up +10.6% 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.


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 7,5467,3797,487Trending Higher

Revenue (TTM) is trending higher meaning that it has increased for at least five consecutive quarters (we can see the trend in the chart below the analysis).

Revenue over the trailing twelve months (TTM) for HSY is rising. For the most recent (annual) period the company reported $7.55 billion from $7.38 billion a year ago, or a 2.3% change. The two-year change in revenue (TTM) is $59 million (a 0.8% 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.
Finally, the up trend (consecutive quarters) in revenue benefited the fundamental (star) rating.

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


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Operating Revenues/Operating Expense 1.281.231.18Rising

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 1.28.

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 increasing and are also currently greater than 1.0 (the critical level).

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 positive (raises the rating).

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) 692817502Falling

Net Income (after tax profit) over the trailing twelve months (TTM) for HSY is falling. For the most recent trailing-twelve-months (TTM) the company reported net income of $692 (million). That's a decrease in the most recent year from $817 (million) or a -15.28% 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 falling 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) -1,443803557Falling

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 $803 million last year). For the most recent trailing-twelve-months the company reported Levered Free Cash Flow (TTM US$ Millions) of $-1,443 million.

This cash metric is down $-2,001 million from $557 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) 250287376
Falling

Capital Expenditures (TTM US$ Millions) in the most recent quarter for HSY was $250 million. CapEx is falling (-12.87%) from last year's value of $287 million. Further, we can see that CapEx today relative to two-years ago is decreasing (-33.54%) from last year's value of $376 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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