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Hershey's (HSY) Q2 Earnings in the Cards: Key Things to Note
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The Hershey Company (HSY - Free Report) is likely to register a top and bottom-line decrease when it reports second-quarter 2024 earnings on Aug 1. The Zacks Consensus Estimate for revenues is pegged at $2.30 billion, which indicates a 7.6% decline from the year-ago period.
The consensus mark for earnings has dropped by a penny in the past 30 days to $1.44 per share, which suggests a decline of 28.4% from the year-ago quarter’s figure. HSY has a trailing four-quarter earnings surprise of 6.8%, on average.
Strong brand innovation (like the recent Reese’s Caramel) and frequent buyouts have been adding to Hershey’s portfolio strength. Effective pricing actions have also been working for the company. The company’s investments in innovation, marketing and in-store execution have been aiding, leading to better consumer engagement and enhanced market share performance across segments. These upsides bode well for the quarter under review.
Despite well-established brands and market presence, macroeconomic headwinds, including inflation and changes in consumer spending, are a challenge. Also, risks related to adverse foreign currency movements are a concern, given Hershey’s wide international presence.
Additionally, Hershey is operating in a volatile business environment, witnessing high commodity costs. High cocoa prices and elevated sugar costs might have put pressure on the gross margin in the quarter under review. On its last earnings call, management highlighted that it expects the gross margin to decline approximately 200 bps in 2024, which remains a concern for the second quarter. Our model suggests an adjusted gross margin contraction of 310 basis points to 42.1% in the second quarter.
Hershey has also been grappling with higher selling, marketing and administrative expenses. In the first quarter of 2024, the company’s selling, marketing and administrative expenses rose 6.3% year over year on increased levels of media, capability and technology investments. Advertising and related consumer marketing expenses moved up 12%, with elevated investments across all segments. We estimate adjusted selling, marketing and administrative expenses to increase 1.3% year over year in the second quarter of 2024.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Hershey this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Hershey currently carries a Zacks Rank #3, and it has an Earnings ESP of -0.24%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are three companies worth considering, as our model shows that these have the correct combination to beat on earnings this time:
The company is likely to register a top and bottom-line decline when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Clorox’s quarterly revenues is pegged at $1.97 billion, calling for a decline of 2.4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Clorox’s quarterly earnings of $1.54 implies a drop of 7.8% from the year-ago quarter’s levels. However, Clorox has a trailing four-quarter earnings surprise of 128.5%, on average.
Coty (COTY - Free Report) has an Earnings ESP of +22.73% and a Zacks Rank of 3 at present. The company is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COTY’s quarterly earnings has remained unchanged in the past 30 days at 5 cents per share. The consensus mark for earnings indicates a 400% surge from the figure reported in the year-ago quarter.
The consensus estimate for quarterly revenues is pegged at $1.38 billion, which indicates a rise of 1.8% from the figure reported in the year-ago quarter. COTY delivered a trailing four-quarter average negative earnings surprise of 22.2%.
Procter & Gamble (PG - Free Report) currently has an Earnings ESP of +0.64% and a Zacks Rank #3. The company is likely to register top-line growth when it reports fourth-quarter fiscal 2024 numbers. The consensus mark for revenues is pegged at $20.72 billion, which implies a rise of 0.8% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for Procter & Gamble’s quarterly earnings per share of $1.37 is in line with the figure reported in the year-ago quarter. PG has a trailing four-quarter earnings surprise of 6.5%, on average.
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Hershey's (HSY) Q2 Earnings in the Cards: Key Things to Note
The Hershey Company (HSY - Free Report) is likely to register a top and bottom-line decrease when it reports second-quarter 2024 earnings on Aug 1. The Zacks Consensus Estimate for revenues is pegged at $2.30 billion, which indicates a 7.6% decline from the year-ago period.
The consensus mark for earnings has dropped by a penny in the past 30 days to $1.44 per share, which suggests a decline of 28.4% from the year-ago quarter’s figure. HSY has a trailing four-quarter earnings surprise of 6.8%, on average.
Hershey Company (The) Price and EPS Surprise
Hershey Company (The) price-eps-surprise | Hershey Company (The) Quote
Factors to Note
Strong brand innovation (like the recent Reese’s Caramel) and frequent buyouts have been adding to Hershey’s portfolio strength. Effective pricing actions have also been working for the company. The company’s investments in innovation, marketing and in-store execution have been aiding, leading to better consumer engagement and enhanced market share performance across segments. These upsides bode well for the quarter under review.
Despite well-established brands and market presence, macroeconomic headwinds, including inflation and changes in consumer spending, are a challenge. Also, risks related to adverse foreign currency movements are a concern, given Hershey’s wide international presence.
Additionally, Hershey is operating in a volatile business environment, witnessing high commodity costs. High cocoa prices and elevated sugar costs might have put pressure on the gross margin in the quarter under review. On its last earnings call, management highlighted that it expects the gross margin to decline approximately 200 bps in 2024, which remains a concern for the second quarter. Our model suggests an adjusted gross margin contraction of 310 basis points to 42.1% in the second quarter.
Hershey has also been grappling with higher selling, marketing and administrative expenses. In the first quarter of 2024, the company’s selling, marketing and administrative expenses rose 6.3% year over year on increased levels of media, capability and technology investments. Advertising and related consumer marketing expenses moved up 12%, with elevated investments across all segments. We estimate adjusted selling, marketing and administrative expenses to increase 1.3% year over year in the second quarter of 2024.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Hershey this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Hershey currently carries a Zacks Rank #3, and it has an Earnings ESP of -0.24%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are three companies worth considering, as our model shows that these have the correct combination to beat on earnings this time:
Clorox (CLX - Free Report) currently has an Earnings ESP of +1.20% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is likely to register a top and bottom-line decline when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Clorox’s quarterly revenues is pegged at $1.97 billion, calling for a decline of 2.4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Clorox’s quarterly earnings of $1.54 implies a drop of 7.8% from the year-ago quarter’s levels. However, Clorox has a trailing four-quarter earnings surprise of 128.5%, on average.
Coty (COTY - Free Report) has an Earnings ESP of +22.73% and a Zacks Rank of 3 at present. The company is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COTY’s quarterly earnings has remained unchanged in the past 30 days at 5 cents per share. The consensus mark for earnings indicates a 400% surge from the figure reported in the year-ago quarter.
The consensus estimate for quarterly revenues is pegged at $1.38 billion, which indicates a rise of 1.8% from the figure reported in the year-ago quarter. COTY delivered a trailing four-quarter average negative earnings surprise of 22.2%.
Procter & Gamble (PG - Free Report) currently has an Earnings ESP of +0.64% and a Zacks Rank #3. The company is likely to register top-line growth when it reports fourth-quarter fiscal 2024 numbers. The consensus mark for revenues is pegged at $20.72 billion, which implies a rise of 0.8% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for Procter & Gamble’s quarterly earnings per share of $1.37 is in line with the figure reported in the year-ago quarter. PG has a trailing four-quarter earnings surprise of 6.5%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.