The Hershey Company (NYSE:HSY) announced its results for the third quarter on October 25, 2012. Hershey manufactures chocolate and confectionery products, food and beverage enhancers and gum and mint refreshment products.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Earnings: Quality Means Everything
The Numbers: The Hershey beat expectations with its latest EPS and revenue figures. The company reported adjusted net income of 87 cents per share versus the 86 cents per share estimate and revenues of $1.75 billion versus the $1.42 billion estimate. Revenue climbed 7.5% from the same period last year. The Hershey's revenue has grown during each of the past four quarters on a year-over-year basis. The Hershey's profit for the third quarter was down 10.2% to $176.7 million. With last quarter's falling profit, the company ends a run of four consecutive quarters of year-over-year profit increases.
Management Quote: "The Hershey Company delivered another good quarter of core brand growth driven by solid performance within key retail channels," said John P. Bilbrey, President and Chief Executive Officer, The Hershey Company. "Importantly, Hershey U.S. candy, mint and gum (CMG) retail takeaway for the 12 weeks ended October 6, 2012, in the expanded all outlet combined plus convenience store channels (xAOC+C-store), which accounts for approximately 90 percent of our U.S. retail business, was up 5.9 percent, resulting in a market share gain of 1.1 points. Our performance was solid in the convenience and dollar store channels with volume and unit trends positive. Overall, Hershey's results were balanced as we gained xAOC+C-store market share within all segments of CMG. I'm particularly pleased with our chocolate marketplace performance where we gained 0.4 market share points driven by core brands and new products. Our CMG volume and unit trends at retail continue to progress and we expect sequential improvement in the fourth quarter. Additionally, Halloween sales are off to a good start with solid programming, merchandising and promotions being executed in the marketplace."
A Look Back: Net income has increased 6.5% year-over-year on average across the last five quarters. The biggest gain came in the first quarter, when income climbed 24.1% from the year-earlier quarter.
Looking Ahead: Analysts appear increasingly optimistic about the company's results for the next quarter. The average estimate for the fourth quarter has moved up from 73 cents a share to 75 cents over the last 90 days. When analyst increase earnings estimates investors can assume business has been stronger than first thought and is an encouraging sign for investors. The average estimate for the fiscal year is $3.23 per share, a rise from $3.22 90 days ago.