Will Buyouts & Savings Drive Hershey's (HSY) Q2 Earnings
Zacks Investment Research | Jul 16, 2019 09:48PM ET
The Hershey Company (NYSE:HSY) is scheduled to release second-quarter 2019 results on Jul 25. The renowned chocolate provider has a mixed record of earnings surprises in the trailing four quarters. In the last reported quarter, the company delivered positive earnings surprise of 7.4%. Let’s see how things are placed ahead of the upcoming quarterly announcement.
Estimates Reveal Bright Prospects
The Zacks Consensus Estimate for earnings has remained stable in the past 30 days at $1.18, which indicates 3.5% growth from the year-ago quarter’s figure. The consensus mark for revenues is pegged at $1,763 million, suggesting a rise of 0.6% from the year-ago quarter’s level.
Factors Likely to Impact Results
Buyouts have been boosting Hershey’s portfolio. Notably, the company’s top line is steadily gaining from Amplify Snack Brands. The buyout has strengthened the company’s footing in the fast-growing market for healthy snacks. Hershey’s acquisition of Pirate Brands from B&G Foods (NYSE:BGS) , has also aided augmenting snacking business. Continued endeavors to strengthen these banners are likely to yield positive results. Management had stated that it expects net positive impact from buyouts and divestitures of roughly 0.5 point on net sales in 2019.
We expect these buyouts to continuously boost the top line in the quarter under review. Performance is also likely to benefit from newly-launched products across different markets to meet consumers’ specific needs. Moreover, advancements in the e-commerce channel and benefits from net price realization are likely to drive growth.
Apart from efforts to enhance revenue scope, Hershey has been engaging in strategies to bolster profitability. In this context, the company is progressing with SKU rationalizing efforts. In addition, it is on track with the Margin for Growth multi-year program. Per this multi-year initiative, the company focuses on streamlining the operating model. Management expects overall savings of approximately $150-$175 million from the initiative. This is likely to contribute favorably in the impending quarter.
Hershey Company (The) Price, Consensus and EPS Surprise
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