Why Hershey Stock Looks Sweet Today

The Motley FoolFeb 5, 2026 5:53 PM

Key Points

A strong fourth quarter looks to be the start of a turnaround.
Hershey estimates adjusted earnings will soar in 2026.
A recovery in gross margin is expected to continue throughout 2026.
10 stocks we like better than Hershey ›

Hershey (NYSE: HSY) shareholders are feeling sweet today. A challenging operating environment in 2025 looks to be in the rearview mirror. The company reported strong fourth-quarter results today, but 2026 guidance may be why shares soared as much as 10% this morning.

As of 12:35 p.m. ET, Hershey stock remained up by 7.2%.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »

young child eating chocolate candy bar in front of orange wall

Image source: Getty Images.

Profitability in focus

Investors bid up Hershey shares for several reasons today. Fourth-quarter results gave investors a peek into a business in recovery. Soaring cocoa prices last year hit Hershey's profitability hard. The latest results show profit margins are ramping back up, however. Management also gave investors a rosy outlook for continued progress in that area throughout 2026.

Organic sales increased 5.7% in Q4, representing faster growth than earlier in the year. Adjusted gross margin was 38.3%, a nice increase from 31.8% reported in the third quarter. During its conference call for investors, management also said investors should expect the full-year 2026 adjusted gross margin to increase to 41%.

That was great news for investors. Price increases and lower cocoa prices are driving the recovery in the company's profitability. There is also room for expenses to drop further as hedged cocoa purchases roll to lower prices. That should result in 2026 adjusted earnings per share increasing 30% to 35% versus 2025.

Hershey also saw lower-than-expected tariff costs on some supplier materials, helping to drive gross margin higher. A 6% dividend increase was one last bit of sweet news from Hershey. It's no wonder shares soared today.

Should you buy stock in Hershey right now?

Before you buy stock in Hershey, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hershey wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $432,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,067,820!*

Now, it’s worth noting Stock Advisor’s total average return is 894% — a market-crushing outperformance compared to 194% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of February 5, 2026.

Howard Smith has positions in Hershey. The Motley Fool has positions in and recommends Hershey. The Motley Fool has a disclosure policy.

Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial or investment advice.