Over the past six months, Hershey’s stock price fell to $172.20. Shareholders have lost 9.9% of their capital, which is disappointing considering the S&P 500 has climbed by 8.6%. This might have investors contemplating their next move.
Is there a buying opportunity in Hershey, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Hershey Not Exciting?
Despite the more favorable entry price, we don’t have much confidence in Hershey. Here are three reasons why HSY doesn’t excite us, plus one stock we’d rather own.
1. Demand Slipping as Sales Volumes Decline
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Hershey’s average quarterly sales volumes have shrunk by 2% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable. 
2. Shrinking Operating Margin
Operating margin is a key profitability metric because it accounts for all expenses enabling a business to operate smoothly, including marketing and advertising, IT systems, wages, and other administrative costs.
Analyzing the trend in its profitability, Hershey’s operating margin decreased by 6.3 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its operating margin for the trailing 12 months was 14.3%.
3. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Hershey, its EPS declined by 9.8% annually over the last three years while its revenue grew by 3.7%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Hershey isn’t a terrible business, but it doesn’t pass our bar. After the recent drawdown, the stock trades at 19.1× forward P/E (or $172.20 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We’re pretty confident there are superior stocks to buy right now. Let us point you toward our favorite semiconductor picks and shovels play.
Stocks We Would Buy Instead of Hershey
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
