Earnings Preview: The Hershey Company

| About: The Hershey (HSY)

The Hershey Company (NYSE:HSY) is expected to report Q3 earnings before market open Thursday, October 16, with a conference call scheduled for 8:30 am ET.


Analysts are looking for EPS of 65c on revenue of $1.45B. The consensus range is 63c to 67c for EPS, and revenue of $1.45B to $1.46B, according to First Call. Hershey gave FY08 EPS guidance when it reported its Q2 earnings. The company expects FY08 EPS of $1.85 to $1.90 vs. consensus of $1.83. On August 15, Hershey reiterated its FY08 EPS guidance and forecasted FY08 revenue growth of 3% to 4%.

The company also lowered its FY09 revenue growth guidance to 2% to 3% from 3% to 5%. On September 22 reports surfaced that Nestle (OTCPK:NSRGY) and Hershey were in talks over a potential deal that could involve a merger or a stake sale. According to market sources, Hershey had been working with JP Morgan (NYSE:JPM) on a deal and that Nestle has been listed as a potential buyer. One deal involved Nestle buying a 25% stake in Hershey with the option to buy the remaining 75% in two years time.

Analyst Views

Hershey was downgraded to Hold from Buy on August 18, by Citigroup and Gabelli. Citigroup downgraded the company shares on valuation with the stock nearing their $42 target. Gabelli downgraded the shares after the company announced a 10% price increase and said its 2008 earnings would be at the bottom end of its previous guidance. The firm believes the company is going to continue to struggle to increase its sales.