Earnings Preview: The Hershey Company - Analyst Blog

The Hershey Company (HSY) a top producer of confectionery products, is scheduled to report its fourth-quarter and fiscal 2010 financial results on Wednesday, February 2, 2011. The current Zacks Consensus Estimate for the quarter is 61 cents a share and for fiscal 2010 is $2.55.

Third-Quarter 2010, a Synopsis

Hershey's has posted third-quarter 2010 financial results. The quarterly earnings of 79 cents a share remained in line with the Zacks Consensus Estimate but rose 8.2% from 73 cents earned in the prior-year quarter on the heels of growth in emerging markets.

Hershey now expects fiscal 2010 earnings between $2.52 and $2.56 per share, up from $2.47 and $2.52 previously forecasted. For fiscal 2011, the manufacturer of Hershey's Kisses and Kit Kat bars expects earnings in the range of $2.67 to $2.76 per share, reflecting a growth of 6% to 8% that remains in line with the company's long-term target.

Despite economic woes, Hershey sustained its top-line momentum with consumers preferring moderately priced candies compared to premium ones. Net sales of $1,547.1 million rose 4.2% from the prior-year quarter, buoyed by core brands' volume growth, effective stock management and lower sales return. Foreign currency translation favorably impacted sales by 0.5%.

Hershey reiterated its growth target of 7% in the top-line for fiscal 2010. For fiscal 2011, it expects sales to rise in the range of 3% to 5% consistent with its long-term target.

Fourth Quarter 2010 Consensus

Analysts surveyed by Zacks expect Hershey's to post fourth-quarter 2010 earnings of 61 cents a share. The current Zacks Consensus Estimate represents a year-over-year decline of 3.2%. Analyst estimates for the quarter range from a low of 60 cents to a high of 64 cents over the past 30 days.

The current Zacks Consensus Estimate has increased by 3.2% over the last 30 days; as 2 of the 15 analysts covering the stock for the current quarter revised their estimates upward. For the year 3 of the 15 analysts revised their estimates upward. However, in the last 30 days, none of the analysts lowered the forecast.

Earnings Surprise History

With respect to earnings surprises, Hershey's has reported well above the Zacks Consensus Estimate over the last four quarters with an average of 16.56%. This suggests that Hershey's has outperformed average analyst expectations during this period. However, the trend indicates that results are expected to outperform the estimates.

Zacks Rank

Hershey's currently holds a Zacks #3 Rank, which translated to short term Hold rating.