Stock Analysis | The Hershey Outlook - Mixed Signals Amid Volatility

Market Snapshot

Headline: The Hershey (HSY) faces a mixed outlook with weak technicals but strong fundamentals. The stock has seen a 2.23% price rise recently, but technical indicators suggest caution due to more bearish than bullish signals.

News Highlights

Recent global and industry developments could indirectly affect The Hershey:

• DoorDash's Acquisition Strategy (May 31, 2025): DoorDash’s $3.9 billion acquisition of Deliveroo highlights ongoing consolidation in the food delivery sector, which may reflect broader consumer behavior trends in snack and food consumption.
• India's Food Labeling Regulations (May 28, 2025): The Supreme Court's directive to finalize food labeling regulations in India could influence global food safety standards and consumer perception of packaged snacks, potentially impacting Hershey’s international brand strategy.
• Israel's Gaza Food Plan (May 30, 2025): Israel’s new food distribution plan in Gaza underscores growing global focus on food security and aid logistics. While this doesn’t directly impact Hershey, it reflects broader economic and humanitarian shifts that could indirectly affect supply chain dynamics in the food sector.

Analyst Views & Fundamentals

Analysts are showing a generally neutral stance toward The Hershey. The simple average analyst rating is 2.71, while the performance-weighted rating is 3.01. These ratings indicate a modestly bullish outlook, though not overly enthusiastic. The ratings are consistent with each other and with the current price rise of 2.23%.

From a fundamental standpoint, Hershey's internal diagnostic scores suggest strong financial health. Here are the key fundamentals and their model scores (scores range from 0 to 10):

• Net income-to-revenue ratio: -1.42% (Score: 8.17)
• Return on assets (ROA): 0.46% (Score: 8.17)
• EV/EBIT: 91.88 (Score: 6.00)
• Net assets per share (growth rate): -4.37% (Score: 5.50)
• Cash flow from operating activities (CFOA): 0.82% (Score: 8.17)
• Annualized return on total assets: 8.47% (Score: 8.17)

These fundamentals suggest strong operational performance and cash flow, but the company is showing weaker growth in earnings per share, with both basic and diluted EPS declining year-over-year by about 70.5%.

Money-Flow Trends

Investor behavior in The Hershey shows a negative overall trend, despite positive retail (small investor) inflow. Specifically:

• Small investor inflow ratio: 50.43%
• Large and extra-large investor inflow ratios: 48.68% and 46.25%, respectively
• Block investor trend: Negative, with a block inflow ratio of 47.84%

These mixed signals suggest that while small investors are optimistic, institutional investors and large money are taking a more cautious stance, which could lead to short-term volatility.

Key Technical Signals

Recent technical indicators show a weak trend with more bearish than bullish signals:

• Ex-Dividend Date (Score: 7.75): A strong bullish signal due to historical performance showing a 1.23% average return.
• MACD Golden Cross (Score: 2.57): A weak signal, with an average return of -0.6% historically.
• Bearish Engulfing (Score: 2.79): A negative signal, indicating a potential price drop.
• WR Overbought (Score: 3.68): Suggests the stock is overbought, but with a neutral outlook.

Recent chart patterns include a Bearish Engulfing candle and a MACD Golden Cross within the last week, indicating conflicting signals. This volatility suggests that traders should monitor the stock closely for clarity on the next directional move.

Conclusion

Consider waiting for a pull-back before entering a long position in The Hershey. While the fundamentals are strong and the stock has seen a modest price rise, the technical indicators are weak and mixed, with more bearish signals than bullish ones. Investors should also watch for any changes in analyst ratings and for updates on earnings and dividend schedules. With the recent ex-dividend date and mixed money flows, patience may be the best strategy at this juncture.