Value
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.8 |
| P/S | 8.2 |
| EV/EBITDA | 0.9 |
| Fwd P/E | 6.9 |
| PEG | 6.8 |
| Analyst target | 6.0 |
- ▸Forward P/E: 18.4x
- ▸PEG: 1.05
HSY · Why this verdict
Why The Hershey (HSY) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 18.2x and a PEG of 1.04, shares trade at a reasonable multiple relative to the company's growth profile, while a risk/reward ratio of roughly 2.4-to-1 in your favor and approximately 7.9% headroom to the analyst consensus target provide a structured entry case at a small initial position. Price targets | The stock appreciates toward the analyst consensus target over 12 months as fundamentals remain intact, capturing the available upside while the favorable asymmetry persists. | →Stable |
| CounterManufacturing concentration in the United States and a debt-to-equity ratio of 1.2 introduce operational and financial leverage risk; if domestic conditions deteriorate materially, the apparently favorable risk/reward structure could reverse faster than the fundamental picture suggests. | ||
Free cash flow of 140% relative to net income — well above what most businesses achieve — combined with a Piotroski F-Score of 7/9 indicates a financially sound business that converts accounting profits into real cash at an above-average rate. Quality breakdown | The FCF-to-net-income ratio remains above 100% over the next four quarters, confirming the cash conversion quality is structural rather than episodic. | →Stable |
| CounterAn elevated FCF conversion ratio can reflect deferred capital investment rather than genuine earnings quality; if maintenance spending normalizes upward, free cash flow may compress toward or below net income. | ||
Four consecutive earnings beats with an average positive surprise of roughly 18% demonstrate a sustained pattern of consistently under-promising and over-delivering, distinguishing actual reported results from what Wall Street anticipated each quarter. Earnings | EPS continues to exceed consensus estimates in each of the next four quarters, maintaining an average positive surprise above 10% on a trailing basis. | →Stable |
| CounterFour consecutive beats against what may have been already conservative estimates could narrow if input cost pressures or volume softness emerge; the buffer embedded in guidance may not be as durable as the recent streak implies. | ||
The stock currently trades below its 200-day moving average, but the long-term average itself is still rising at roughly +0.7% per month — consistent with a pullback within an intact uptrend rather than a confirmed breakdown. Momentum breakdown | Price recovers back above the 200-day moving average within three months while the long-term average continues to slope positively. | →Stable |
| CounterThe current technical formation — death cross, RSI near 37, bearish MACD — indicates near-term selling pressure that, if sustained, could eventually pull the 200-day average into a negative slope and convert the pullback into a confirmed trend reversal. | ||
At a forward P/E of 18.2x and a PEG of 1.04, shares trade at a reasonable multiple relative to the company's growth profile, while a risk/reward ratio of roughly 2.4-to-1 in your favor and approximately 7.9% headroom to the analyst consensus target provide a structured entry case at a small initial position.
→StablePrice targets
- Expectation
- The stock appreciates toward the analyst consensus target over 12 months as fundamentals remain intact, capturing the available upside while the favorable asymmetry persists.
CounterManufacturing concentration in the United States and a debt-to-equity ratio of 1.2 introduce operational and financial leverage risk; if domestic conditions deteriorate materially, the apparently favorable risk/reward structure could reverse faster than the fundamental picture suggests.
Free cash flow of 140% relative to net income — well above what most businesses achieve — combined with a Piotroski F-Score of 7/9 indicates a financially sound business that converts accounting profits into real cash at an above-average rate.
→StableQuality breakdown
- Expectation
- The FCF-to-net-income ratio remains above 100% over the next four quarters, confirming the cash conversion quality is structural rather than episodic.
CounterAn elevated FCF conversion ratio can reflect deferred capital investment rather than genuine earnings quality; if maintenance spending normalizes upward, free cash flow may compress toward or below net income.
Four consecutive earnings beats with an average positive surprise of roughly 18% demonstrate a sustained pattern of consistently under-promising and over-delivering, distinguishing actual reported results from what Wall Street anticipated each quarter.
→StableEarnings
- Expectation
- EPS continues to exceed consensus estimates in each of the next four quarters, maintaining an average positive surprise above 10% on a trailing basis.
CounterFour consecutive beats against what may have been already conservative estimates could narrow if input cost pressures or volume softness emerge; the buffer embedded in guidance may not be as durable as the recent streak implies.
The stock currently trades below its 200-day moving average, but the long-term average itself is still rising at roughly +0.7% per month — consistent with a pullback within an intact uptrend rather than a confirmed breakdown.
→StableMomentum breakdown
- Expectation
- Price recovers back above the 200-day moving average within three months while the long-term average continues to slope positively.
CounterThe current technical formation — death cross, RSI near 37, bearish MACD — indicates near-term selling pressure that, if sustained, could eventually pull the 200-day average into a negative slope and convert the pullback into a confirmed trend reversal.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Hershey combines a perfect four-quarter earnings beat streak averaging roughly 18% above consensus with free cash flow conversion of 140% of net income, offering a favorable risk/reward of approximately 2.4-to-1 at a small initial position — though the stock is in a near-term technical pullback that has not yet been confirmed as a reversal.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.7 |
| ROA | 5.2 |
| Gross margin | 3.0 |
| Op margin | 8.5 |
| Net margin | 4.6 |
| Current ratio | 4.7 |
| FCF quality | 9.7 |
| Moat | 6.8 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 140% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
7.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.2 |
| EPS growth | 10.0 |
Momentum
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 5.2 |
| Volume | 3.1 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+0.3%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.5 |
| erm sentiment | 6.0 |
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Notable insider selling — $95,452,170 (0.258% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.7 |
| quality rank | 5.0 |
| growth rank | 6.7 |
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.8 |
| support resistance | 2.7 |
| 52w position | 5.3 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.8 |
| days to cover | 6.3 |
| volatility | 5.3 |
| put call | 0.0 |
| implied vol | 5.7 |
| beta | 10.0 |
| debt equity | 4.6 |
- ▸Elevated put/call: 2.34
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 319.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (6)
- MOMENTUM:6.6>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:25d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.8<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.85
Upside
+6.7%
Downside
7.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 25d with 4/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.8<1.5@spot) reinforce the read. Current asymmetry R:R is 0.85 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.6, Catalyst at 7.3, and Momentum at 6.6; the weakest are Insider at 3.4, Technical at 3.6, and Peer rank at 4.6. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.85 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Outperformance
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, ending the positive beat streak.
- P2Strong Cash Conversion Quality
Trip ifFCF-to-net-income ratio falls below 100% for 2 consecutive quarters.
- P3Momentum Pullback In Uptrend
Trip ifThe 200-day moving average monthly slope falls below 0% (turns negative) and holds for 2 consecutive months.
- P4Favorable Risk Reward Geometry
Trip ifForward P/E expands above 25x as earnings estimates are cut, eliminating the valuation support underpinning the risk/reward case.