The Hershey Company is a leading global confectionery company that was founded in 1894 by Milton S. Hershey in Pennsylvania, United States. It is known for its iconic chocolate brands such as Hershey's, Reese's, and Kit Kat, as well as its non-chocolate brands such as Jolly Rancher and Ice Breakers. In this essay, we will conduct a financial analysis of the Hershey Company to understand its financial health and performance.
First, let's start by looking at the company's revenue and profitability. According to its 2020 annual report, the Hershey Company generated $7.45 billion in revenue, which represents a 4.5% increase compared to the previous year. The company's net income for 2020 was $738.2 million, which represents a 6.8% increase compared to the previous year. The company's gross profit margin, which is the percentage of revenue that remains after deducting the cost of goods sold, was 54.5% in 2020. This indicates that the company is able to generate a significant amount of profit from its sales.
Next, let's look at the company's liquidity, which is a measure of its ability to pay its short-term debts and obligations. The Hershey Company has a current ratio of 1.34, which is considered strong. This means that the company has enough current assets, such as cash and marketable securities, to cover its current liabilities, such as accounts payable and short-term debt. The company also has a quick ratio of 0.93, which is considered good. This ratio measures the company's ability to meet its short-term obligations using only its most liquid assets.
Another important financial indicator to consider is the company's debt level. The Hershey Company has a debt-to-equity ratio of 1.07, which is considered moderate. This means that the company has a moderate amount of debt relative to its equity. It is important to note that high levels of debt can increase a company's risk, as it can be more difficult to make debt payments in times of financial strain. However, it is also important to consider that some level of debt can be necessary for a company to finance its operations and growth.
Finally, let's look at the company's stock performance. The Hershey Company's stock price has increased by approximately 40% over the past year, which is a strong performance. The company's dividend yield, which is the annual dividend per share divided by the stock price, is currently 2.2%. This means that the company is returning a portion of its profits to its shareholders in the form of dividends.
In conclusion, the financial analysis of the Hershey Company shows that it is a financially healthy and successful company. It has a strong revenue and profitability, good liquidity, a moderate level of debt, and a strong stock performance. These factors combined indicate that the Hershey Company is well-positioned to continue its growth and success in the future.