Hershey Q1 Earnings Preview: Will MrBeast's Feastables, Rising Cocoa Prices Hurt Chocolate Company's Results?

chocolate and snack foods company Hershey Co. HSY is set to report first-quarter financial results on Friday, May 3, before the market opens.

Here are the earnings estimates from analysts and key items to watch for investors.

Earnings Estimates: Analysts expect Hershey to report first-quarter revenue of $3.11 billion, according to data from Benzinga Pro.

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The company reported revenue of $2.99 billion in last year's first quarter. Hershey has beaten analyst estimates for revenue in eight of the last 10 quarters. It missed estimates in two of the last three quarters.

Analysts expect the candy bar maker to report earnings per share of $2.76 for the first quarter, compared to $2.96 reported in last year's first quarter. The company has beaten analysts' estimates for earnings per share in 10 straight quarters.

Hershey's outlook for the full fiscal year sees net sales growth of 2% to 3% and adjusted ESP to be flat at $9.59 from the prior year.

Key Items to Watch: One of the key items to watch in Hershey's financial results and commentary is the rising cost of cocoa and the impact it is having on the company and consumers.

"While historic cocoa prices are expected to limit earnings growth this year, we believe our strong marketing plans, innovation and brand investments will drive top-line growth and meet consumers' evolving needs," CEO Michele Buck said earlier this year.

The company focused on non-chocolate items for the Easter holiday and has also shrunk sizes on items to deal with the rising costs, according to reports.

Hershey sees the higher commodity inflation having a bigger impact in the second half of the year. Commentary on this item could be key for analysts and investors.

Hershey Vs. Feastables

Another key item to watch is the competition from YouTube star Jimmy Donaldson, also known as MrBeast. Donaldson launched Feastables as a competing chocolate bar brand to Hershey in 2022.

The brand has a strong presence in key retail stores, has landed help from MrBeast's huge social media following and also signed a jersey sponsorship with the NBA's Charlotte Hornets.

Feastables could start chipping into the market share Hershey has in chocolate bars.

The Bear Cave previously issued a short report on Hershey. Feastables’ rise is a key catalyst for a potential fall in the price of Hershey stock.

"While Hershey has customers, Feastsables has fans," Bear Cave author Edwin Dorsey wrote previously.

Donaldson also shared previously that a friend of his was selected for a blind taste test of Hershey's vs. Feastables, suggesting the chocolate giant was exploring the brand's encroachment in the space.

Donaldson responded to the short report saying it "seems lame" to recommend shorting a company, but also hinted that the future could be concerning for Hershey.

"Next few years between Feastables and Hershey's will be interesting once I actually ramp up," Donaldson said.

Hershey isn't likely to name-drop MrBeast or Feastables in their commentary. But investors might be able to get a sense of market share losses or brands seeing pressure in retail.

HSY Price Action: Hershey shares trade at $194.93 versus a 52-week trading range of $178.82 to $276.88. Shares of Hershey are down 30% over the last year.

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