The Hershey Company By Tyler Brautigam

Introduction

  • Rich history of growth and success since 1894
  • Industry: Sugar and confectionary products
  • In 2014, acquired Shanghai Golden Monkey, which led to a $281 million goodwill impairment in 2015

Strengths

  • Shareholder confidence - seen in high P/E ratio in 2015 (52.08) despite large drop in EPS
  • Brand name and awareness - over 30 brands
  • Customer loyalty

Weaknesses

  • Poor liquidity
  • Current Ratio: 0.833 - Quick Ratio: 0.426
  • Volatile investments - Around 2 acquisitions per year

Other Key Financials

  • Heavily leveraged - balanced by high times interest earned
  • Debt to Equity: 4.102 - Times Interest Earned: 9.811
  • Strong base of permanent earnings

Industry Outlook

  • Hardly any growth expected in next 5 years
  • Industry is in mature stage of life cycle
  • Less kids are eating candy - shift towards marketing to adults with healthier products

Hershey's Outlook

  • Despite poor industry outlook, Hershey's regularly outperforms the industry
  • As some smaller competitors struggle, opportunity for them to gain market share
  • With over 30 brands, they are able to focus on trends as they happen, such as Brookside

Conclusion

Credits:

Created with images by Forsaken Fotos - "Hershey" • CinCool - "Hershey Chocolate Chicago Illinois" • sillarsclass - "Hersheys and Reeses Candies" • Prayitno / Thank you for (12 millions +) view - "Hershey's Chocoloate World" • mhiguera - "Hershey's" • Jim, the Photographer - "Hershey's Chocolate World Store" • m01229 - "Hershey's Chocolate Mint Candy Canes" • LearningLark - "Hershey's Air Delight"

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