Hershey Co. has recently released its earnings report for the third quarter, beating analysts’ expectations in both of its revenue and profit data. The famed chocolate maker reportedly sold more Kisses and Kit Kat in the quarter thanks to the lower cocoa prices and the cost-cutting efforts done by the company.
Last Thursday, Hershey Co. added 1.6% to $1.79 billion in the third quarter. Most of its revenues rooted from the success of the Kisses and Kit Kat sales as well as the launch of its new product by the name of Chocolate Dipped Pretzels.
The said increase helped in balancing the declines in its other brands and its market share in convenience stores which also posted a plunge in the said sector, the company stated during its investor conference call and Securities and Exchange filings.
Some of the most known Hershey's products.
In other data, Global food manufacturers also struggled in the third quarter as it indicated a weak growth rate which can be rooted from consumers who seek healthier food. Hershey’s Pennsylvania branch has been expanding its portfolio in snacks which are marked as lower-margin products than its candies.
The declining cocoa price rates have certainly helped in the profit generation of the company counting the cost-cutting plans and layoffs this year. As for its cost sales data, the figures declined by 5.2% to $1.09 billion in the said period.
As for the net income, the figures climbed by 20% to $273.3 million or $1.28 per share in the third quarter. Net sales slightly climbed to at least $2.03 billion for the quarter which exceeded the analysts' expectations of $2.01 billion.
Even so, gross margins experienced a decline as higher freight, new packaging and customer service costs encouraged a downtrend in its recent figures, the business added.
As for its EPS, Hershey earned $1.33 per share, pasting forecasters' expectations of $1.29 for the period.
In the midst of tensions caused by price cuts and healthier products, the worldwide food commerce has seen an outbreak of mergers and acquisitions.
Last year, Hershey Co contended with a $107-per-share for the buyout proposition from Mondelez International Inc . At the moment, the Pennsylvania candy maker has been revealed to show interest towards the potential acquisition of Nestle's U.S. candy corporate.
Chief Executive Officer Michele Buck told reports that the company is see unifications and acquisitions as part of its plan, when asked about acquisitions.
"We're particularly interested in companies with accelerating revenue growth ... primarily within the U.S. $100 billion snack wheel," Buck added.
At the time of writing, Hershey’s has successfully traded bullishly on Monday’s opening trades. Despite the earnings beat, it can be seen that it somehow decline in its release making its Relatives Strength Index go deeply under the 30’s region marking it as an oversold stock. It somehow managed to pick up on the following trade sessions. The RSI Level as last found at 38.97 as it added 1.048% from the previous trade.
The decline made the stock enter the negative region of the Coppock curve indicator. With such recovery, it can still rebound towards the positive region. With that, a buy would be much recommended for the chocolate company.
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