The beginning of December 2024 brought a story that some investors were already expecting to see, but not in the way it happened. Despite the rise in cocoa prices and the apparent lack of interest in consumer staples stocks,… Hershey Company New York Stock Exchange: HSE Rose on some unexpected news. For those who understand value investing, news of a potential takeover bid is not out of the ordinary.
Hershey today
(As of 12/13/2024 ET)
- 52 week range
- $168.16
▼
$211.92
- Dividend yield
- 2.99%
- P/E ratio
- 21.09
- Price target
- $185.17
For reasons that will become clear in just a minute, Hershey stock — and the company behind it — is a screaming buy at these prices, even after the recent rally. Even without any financial analysis of the company, investors can rely on this fact: Hershey’s management decided to reject the offer, stating that the valuation presented in the takeover offer was “too low.” Contrary to what some might think, this is an excellent move that Wall Street analysts agree with.
Before delving into the company’s strengths and what might lie ahead to trigger a potential buying spree in its shares, Details of this takeover offer from Mondelez International Company Nasdaq:MDLZ It needs to be covered first so that it is understood what was brought to the table and why management decided it was not good enough to offer today. Whichever way you look at it, this stock likely has enough double-digit upside potential stored in it for the coming months.
Acquisition offer rejected by Hershey Company: details of the offer and reasons for rejection given by management
Although no sources have identified the size of the deal Mondelez is offering, there are ways investors can reverse engineer what the initial offering could have been. The way markets drove the stock to a high of $208 per share after the news is one way to set expectations, where Mondelez may have come too close to the offer and where management thought it was too low.
A stock price of $208 would represent a market cap of $39 billion based on valuation. However, this represents only a fraction of the company’s size just over a year ago at $56 billion. Looking at it from a historical perspective, investors can guess that the stock would then be worth anywhere from $208 per share to its all-time high of approximately $275 per share.
There are several reasons why management rejected this offer, one of which is that most of the core brands in the market today are losing popularity to other hot developments in the technology sector, namely artificial intelligence and quantum computing.
This is why you like stocks Coca Cola Company New York Stock Exchange: K.W. and PepsiCo Nasdaq:Bib It has traded less in the past few months. The stock market is a popularity contest in the short term, and the contest is being won by other, more exciting names, making it likely to buy these strong brands today.
This is why Hershey stock has more upside ahead
Hershey stock forecast today
$185.17
1.18% upreduces
Based on 19 analyst ratings
| High expectations | $225.00 |
|---|---|
| Average expectations | $185.17 |
| Low expectations | $160.00 |
Hershey stock forecast details
Now that investors have a proxy for the potential valuation range in Hershey stock, it’s time to dig deeper and dissect the public opinion on this stock and the reasons why that opinion is that way. When it comes to Wall Street analysts, the consensus view of valuing the stock at $185.2 doesn’t do justice to where this stock should trade.
In April of 2023, analysts thought the stock should have a price target of $265 per share, yet something has remained the same since then until today, making it a bit suspicious as to why target prices were so low. This may be due to a decline in the stock price, which puts additional pressure on analysts to reflect market opinion.
However, Hershey’s financials will tell a very different story, one that could soon turn analysts’ opinions upside down. The company’s gross margins, at 44.5% as of the last 12 months, indicate a potential moat and pricing power dynamism in the brand’s market share.
Retaining a significant amount of capital after each sale allows management to effectively reinvest in the business and create more enterprise value, which is why investors will see a return on invested capital (ROIC) of up to 25% for Hershey.
This is important because annual stock prices tend to match the long-term rate of return on an investment over time; It’s also why investors will see a 200% outperformance in Hershey stock versus the S&P 500 over the past 24 years, an performance that would have been closer to 500% had the stock not declined over the past 12 months.
Another measure to support this belief can be found in institutional investing; As of November 2024, State Street insiders felt confident enough in the stock’s value that they boosted their holdings in it by 5.8%, bringing their net position to a high of $1.3 billion today, or 3.5% ownership in the company.
Before you think about Hershey, you’ll want to hear this.
MarketBeat tracks the highest-rated and best-performing research analysts on Wall Street and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches up… and Hershey wasn’t on the list.
While Hershey currently has a “Discount” rating among analysts, top-rated analysts believe these five stocks are better buys.
View the five stocks here
MarketBeat just released its list of 10 penny stocks that have been overlooked by the market and may be undervalued. Click on the link below to see which companies made the list.
