Shares of chocolate company Hershey (NYSE:HSY) jumped 6.1% in the afternoon session after the company reported fourth-quarter results with non-GAAP EPS exceeding expectations, though revenue missed. Organic revenue unfortunately missed analysts' expectations during the quarter, and its operating margin missed Wall Street's estimates. Guidance for 2024 EPS also calls for no growth, implying $9.60 per share and below Wall Street analysts' estimates, with margins expected to be impacted by possible pricing pressures.
Looking ahead, the company expects FY'2024 revenue to grow 2-3% (versus consensus estimates for 3.4% y/y growth). With volume growth expected to stay flat during the year, this means the bulk of the growth will be from pricing. However, the bright spot during the quarter was the 15% increase in the quarterly dividend to $1.37/share. The new dividend represents a healthy yield of slightly over 2.5% on the current price per share. This demonstrates the company's focus on returning value to shareholders despite the challenging quarter. Overall, this was a mixed quarter for Hershey, with investors likely encouraged by the dividend increase.
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What is the market telling us:
Hershey's shares are not very volatile than the market average and over the last year have had only 0 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Hershey is up 7.2% since the beginning of the year, but at $205.91 per share it is still trading 25.5% below its 52-week high of $276.35 from April 2023. Investors who bought $1,000 worth of Hershey's shares 5 years ago would now be looking at an investment worth $1,899.
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