Hershey's CAGE Update - Analyst Blog
26 Marzo 2013 - 7:05PM
Zacks
The Hershey Company (HSY) reaffirmed its
full-year 2013 guidance and long- term targets for revenue and
adjusted earnings per share at the 2013 Consumer Analyst Group of
Europe (CAGE) conference held in London.
2013 Earnings Outlook
The company maintained its outlook for net sales growth in the
range of 5%–7%. Volume growth in core brands in the U.S. and
internationally, driven by the increased investments in advertising
and go-to-market capabilities; increased innovation in the form of
Kit Kat Minis, Twizzlers Bites, Jolly Ranchers Bites, Kisses
Deluxe, Hershey's Mais and others; and introduction of Brookside
brand products in core retail channels in the U.S. are expected to
help Hershey achieve its sales targets. The company also plans to
expand its season’s business in 2013.
Gross margins are expected to expand in 2013 by 180–200 basis
points, driven by input cost deflation, productivity gains and cost
savings.
The company maintained its adjusted earnings guidance in a range of
$3.56–$3.63, despite planned increases in advertising and marketing
costs. The adjusted earnings guidance represents 10%–12% year-
over-year growth.
Higher investments in core brand marketing, regular product
innovation, productivity improvement and commodity cost deflation
are expected to help Hershey achieve its earnings targets despite a
challenging macroeconomic environment.
Long-Term Outlook
The company discussed several initiatives to drive growth over the
long term.
The company is bullish about its North America business and intends
to make further investments and expand its presence in the region
in order to drive growth. The company intends to continue focusing
on its core brands in the U.S.
Hershey is also keen on expanding its geographic footprint. The
company intends to drive its top-line growth further by focusing on
emerging countries with strong GDP and increasing consumer spending
power. Hershey intends to expand its five core brands of Hershey’s,
Reese’s, Hershey’s Kisses, Jolly Rancher and Ice Breakers in these
markets.
The company believes that net sales outside the U.S. and Canada
will increase 15% to 20% in 2013, higher than 12% in 2012, driven
largely by innovation and increased advertising investments for
both core brands as well as new products. By the end of 2014, the
company intends to achieve $1 billion in net sales in markets
outside the U.S. and Canada. Over the long term, Hershey’s expects
to expand its international revenues from 10% to 25% of net
sales.
Given the company’s robust liquidity position, Hershey is investing
in marketing in order to drive revenue increase. In fact,
advertising is the most important component of brand building. The
company expects its advertising to be the same or double its net
sales growth. The company’s brand investments give it a competitive
advantage and are one of the principal reasons behind the company
witnessing better volume elasticity versus its peers.
The company reaffirmed its long-term outlook. Over the long term,
Hershey expects its organic sales to grow 5–7% and adjusted
earnings per share to increase 8–10%. The company aspires to
achieve $10 billion in net sales by the end of 2017 on the back of
strong organic growth and business development.
Hershey expects to generate operating cash flow, averaging $900
million to $1 billion annually. In addition, the company is
targeting 50% dividend payout ratio. Capital spending is expected
to be slightly below 4% over the next several years, on an average.
Hershey currently carries a Zacks Rank #3 (Hold).
Other companies in the sector that warrant investor attention
include Flowers Foods, Inc. (FLO), J&J
Snack Foods Corp. (JJSF) and ConAgra Foods,
Inc. (CAG). While Flowers Foods and J&J carry a Zacks
Rank #1 (Strong Buy), ConAgra carries a Zacks Rank #2 (Buy).
CONAGRA FOODS (CAG): Free Stock Analysis Report
FLOWERS FOODS (FLO): Free Stock Analysis Report
HERSHEY CO/THE (HSY): Free Stock Analysis Report
J&J SNACK FOODS (JJSF): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Grafico Azioni J and J Snack Foods (NASDAQ:JJSF)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni J and J Snack Foods (NASDAQ:JJSF)
Storico
Da Lug 2023 a Lug 2024