Is Hershey Stock Underperforming the Nasdaq?

The Hershey Company (HSY), headquartered in Hershey, Pennsylvania, manufactures and sells confectionery products and pantry items. Valued at $37.4 billion by market cap, the company's principal products include chocolate and sugar confectionery products, gum and mint refreshment products, and pantry items, such as baking ingredients, toppings, and beverages.

Companies worth $10 billion or more are generally described as “large-cap stocks,” and Hershey perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the confectioners industry. Hershey's strength lies in its strong brand portfolio, including popular names like Hershey's, Reese's, and Kit Kat. With a significant share of the U.S. chocolate market, Hershey's dominant market position provides pricing power and competitive advantage. 

Despite its notable strength, HSY slipped 26.5% from its 52-week high of $239.48, achieved on Mar. 2. Over the past three months, HSY stock declined 21.8%, underperforming the Nasdaq Composite’s ($NASX) 15.8% gains during the same time frame.

Shares of HSY have fell 3.3% on a YTD basis but climbed 8.8% over the past 52 weeks, underperforming NASX’s YTD gains of 11.6% and 32.8% returns over the same time frame.

To confirm the bearish trend, HSY has been trading below its 200-day moving average since mid-April, with slight fluctuations. The stock is trading below its 50-day moving average since mid-March, with minor fluctuations.

HSY’s underperformance stems from investor caution amid soaring cocoa costs, weaker consumer spending, and stiff competition in confectionery. Sales volumes slipped as price-sensitive shoppers cut back on candy in North America. Furthermore, management expects elevated cocoa prices to keep pressuring margins through fiscal 2026, while executives are closely watching consumer sentiment, gas prices, and changes to government assistance that could further impact demand.

On Apr. 30, HSY shares closed down by 1.8% after reporting its Q1 results. Its adjusted EPS of $2.35 surpassed Wall Street expectations of $2.05. The company’s revenue was $3.1 billion, topping Wall Street forecasts of $3 billion. HSY expects full-year adjusted EPS in the range of $8.20 to $8.52.

HSY’s rival, Mondelez International, Inc. (MDLZ) shares lagged behind the stock, with 6.9% losses over the past 52 weeks, but outpaced the stock with a 14.4% uptick on a YTD basis.

Wall Street analysts are reasonably bullish on HSY’s prospects. The stock has a consensus “Moderate Buy” rating from the 23 analysts covering it, and the mean price target of $217.30 suggests a 23.5% potential upside from current price levels.