What happened?
Shares of chocolate company Hershey (NYSE: HSY) jumped 2.8% in the afternoon session after the company reported third-quarter 2026 financial results with higher consolidated net sales and adjusted diluted earnings per share, and management raised its full-year adjusted earnings growth outlook. Consolidated net sales reached $3.275 billion, an increase of 3.0% for the third quarter of 2026. Adjusted diluted earnings per share was $2.64, an increase of 103.1%. On the earnings call, management said that result ran ahead of its expectations because cocoa-hedge gains expected in the fourth quarter arrived in the third quarter, along with tariff refunds and productivity savings. Management raised full-year 2026 adjusted earnings-per-share growth to 36% to 38.5%, including tariff refunds received so far, and said the outlook excluding those refunds is unchanged. It narrowed organic net sales growth to about 3%, citing a more cautious consumer and convenience-store pressure. The U.S. candy, gum, and mint category in that channel fell nearly 5% in September. Chief Executive Officer Kirk Tanner said the company is holding a 2027 sales outlook of 2% to 4%. He said the 2027 innovation pipeline is 50% larger than this year's and should contribute three times as much to growth.
After the initial pop, the shares cooled down to $164.67, up 2.7% from the previous close.
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What is the market telling us
Hershey’s shares are not very volatile and have only had 1 move greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 5% on the news that the Federal Reserve held its benchmark rate at 3.5%–3.75% and delivered a dot plot pointing toward a potential hike. Packaged food companies are held precisely because of their bond-like qualities: predictable earnings and steady dividends in uncertain markets. But those qualities become less distinctive when the 2-year Treasury yield jumps 11 basis points in a single session to 4.161% and the Fed signals rates could move higher still. The late-2025 rate cuts had made dividend stocks look more attractive by widening the yield gap versus Treasuries; The dot plot closed that gap. Companies like Kraft Heinz and Conagra also carry significant acquisition-related debt, meaning rising rate expectations translate directly into higher refinancing costs.
Hershey is down 9.7% since the beginning of the year, and at $164.67 per share, it is trading 30.3% below its 52-week high of $236.28 from February 2026. Investors who bought $1,000 worth of Hershey’s shares 5 years ago would now be looking at only $942.69.
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