HSY stock alert: What to know about Hershey’s Halloween candy shortage warning

Hershey’s (NYSE:HSY) stock rose nearly 2.5% on July 29 after it announced it might run out of Halloween candy.

But that wasn’t the reason investors were snapping up the stock, which rose 19% in a year when S&P500 is down 14%. Investors buy results, and Hershey delivered.

For the quarter ending July 3, Hershey’s reported net income of $315.5 million, $1.53/share fully diluted, on revenue of $2.37 billion. The company also increased its quarterly dividend by 15%, to $1.036 per share.

HSY share: tasty figures

The new dividend brings the share yield to more than 1.8%. The company’s market capitalization is around $48.5 billion and the price-to-earnings ratio is now above 29. Until this year, Hershey’s returns matched those of the market. It has exceeded market returns since January. It has generated an almost 30% return on investment each of the past two years, when dividends and equity gains are combined.

But it was the impending shortage that got the journalists talking. The company blamed supply chain issues and capacity issues. The company said it decided to restock shelves now rather than focus on holiday production. As for current production, everything is on deck, CEO Steve Voskuil said.

Things may not be as scary as they seem. West African countries are expecting a good harvest of cocoa beans in September. Hershey’s recent price increases also hold, with revenue for the quarter up 19%. Even better, savory snack sales have doubled, thanks to last year’s acquisition of Dot’s Homestyle Pretzels for $1.2 billion.

What happens now?

Hershey’s is only considered a “moderate buy” at Tipranks but none of its five analysts say they are selling. It’s a valuable stock, and if there aren’t enough Hersheys at the store in October, let ’em eat Nestle (OTCMKTS:NSRGY). Nestlé should be hungry for your money, NSRGY stock is down 13% in 2022. Or consider some Oreos from Mondelez (NASDAQ:MDLZ), the share price of which was also down over the year.

As of the date of publication, Dana Blankenhorn did not hold any positions at the companies mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.