Reports: Thursday, July 30, 2026, before market open | Conference call: 8:30 a.m. ET
Hershey heads into tomorrow's print with the stock roughly $184, down sharply from its 2026 high near $236 (set in late February) but up about 8% over the last week as broader consumer-staples names (Coca-Cola, Unilever) posted strong prints and cocoa costs continued to ease. The average analyst price target sits around $207-208, implying the Street sees upside even after a rough spring/summer stretch for the stock. Wall Street's Moderate Buy consensus reflects optimism about the 2027 earnings recovery story management laid out at its March Investor Day, tempered by near-term concerns about competitive intensity, elasticity, and macro softness (SNAP cuts, gas prices, GLP-1 adoption).
Consensus expectations for Q2 2026: adjusted EPS of roughly $1.45-$1.46 (up ~20% year-over-year) on revenue of about $2.63 billion, which would be essentially flat versus last year — a sharp deceleration from the 26% revenue growth reported in Q2 2025 (a quarter that was inflated by an easy comparison versus 2024's ERP-implementation-related inventory drawdown).
Hershey opened 2026 well. Consolidated net sales rose 10.6% to $3.10 billion, with organic constant-currency sales up 7.9%, and adjusted EPS of $2.35 beat consensus (~$2.04) by a wide margin. Gross margin recovery was already visible — reported gross margin expanded 570 bps and adjusted gross margin narrowed its decline to just 80 bps as pricing and productivity began offsetting commodity costs. Management reaffirmed full-year 2026 guidance: net sales growth of 4-5% (including ~150 bps from the LesserEvil acquisition), organic net sales growth of 2.5-3.5%, and adjusted EPS growth of 30-35% (implying $8.20-$8.52), on the back of tough 2025 comps distorted by cocoa-driven mark-to-market losses.
1. The expected organic sales dip in Q2 — is it really just timing? CFO Steve Voskuil told analysts on the Q1 call that North America Confectionery organic sales are expected to be "slightly down" in Q2, driven by favorable Easter sell-through and strong S'mores demand that pulled shipments forward into Q1, plus some international customer pull-forward ahead of Middle East disruption risk. Management insisted underlying consumption trends stay consistent through the quarter (weaker in April due to the Easter overlap, building in May and June) — investors will want proof that this was purely a shipment-timing issue and not a sign of slowing demand or intensifying competition.
2. Confection market share and competitive intensity Hershey's Q1 release flagged that CMG (candy/mint/gum) retail share declined versus last year due to increased marketplace competition and the timing of Hershey's own innovation/merchandising cycle. Management called the pricing environment "highly rational" but acknowledged competitors — both mainstream and premium — stepped up innovation and merchandising earlier than expected. Watch for commentary on whether Hershey regained share as spring shelf resets took hold and tent-pole programming (4th of July, S'mores, summer travel) ramped.
3. The margin inflection This is arguably the most important storyline. Voskuil guided to gross margin expansion of nearly 300 bps in Q2, accelerating to more than 500 bps in the back half, as pricing and productivity increasingly outpace lapping commodity costs. Confection segment margin cadence should broadly track gross margin, though operating margin will lag somewhat as advertising investment (guided to double-digit growth for the year) ramps in Q2 and H2.
4. Salty Snacks profitability recovery North America Salty Snacks segment income fell 18% in Q1 (margin down 530 bps) due to a voluntary product withdrawal and delayed distribution-center opening that pushed up logistics costs — both described as one-time issues now resolved. Core salty brands (SkinnyPop, Dot's, LesserEvil) grew nearly 10%, with the segment drag coming mainly from planned reduction of private-label volume. Management guided to double-digit operating income growth for the segment for the full year — Q2 results should show the sequential improvement beginning.
5. Cocoa costs and the 2027 setup Cocoa prices have fallen sharply in 2026 amid a projected supply surplus (StoneX has pegged the 2025/26 surplus at roughly 287,000 metric tons) driven by recovering West African harvests and expanding production from newer origins like Ecuador and Brazil. Hershey management has taken a "cautiously optimistic" near-term stance while flagging that cocoa could stay structurally above historical levels long-term; they noted the company's hedging structure gives it flexibility to participate in downside cocoa pricing, particularly starting in 2027-28 — a potential upside lever to the long-term algorithm laid out at Investor Day (2-4% organic growth and 6-8% EPS growth by 2028, with 2027 framed as an "outsized" earnings-recovery year).
Management has emphasized a pipeline including a new "elevated" premium Hershey's line, continued Reese's Oreo and Jolly Rancher momentum, Dot's Snack Mix expansion, a KitKat U.S. relaunch planned for 2027, and the "One Hershey" go-to-market model combining sweet and salty commercial execution — expected to unlock incremental retail space and tent-pole event participation (4th of July, Halloween, Hershey's 250th-anniversary programming, and a Hershey-branded movie in Q4).
Investors should expect a "noisy but on-track" quarter: a likely headline deceleration in organic sales (partly self-inflicted by strong Q1 shipment timing) paired with early signs of the margin inflection management promised, as pricing and productivity begin to outrun cocoa costs. The key swing factors for stock reaction will be (1) whether North America Confectionery share stabilizes/improves as spring resets and tent-poles activate, (2) whether the guided ~300 bps of Q2 gross-margin expansion materializes on schedule, (3) any early signal on whether full-year guidance could be raised given favorable elasticity trends, and (4) management's updated read on cocoa and 2027 setup given the sharp recent decline in cocoa futures.