nevertheless hersheyCNBC’s Jim Cramer suggested the chocolate maker’s worst problems may be behind the erratic performance of the company’s stock, which he cited as new management.
“They’re very conservative when they talk about the future, but I like that,” he said. “Frankly, even if the stock price hasn’t bottomed out yet, it’s probably close to it, but this only works if you believe in Kirk Tanner’s leadership.”
Kramer said Hershey has struggled over the past two years, blaming the iconic candy maker’s problems on rising prices for GLP-1 weight loss drugs and soaring cocoa prices. He added that the stock price has improved over the past month, rising from a high of about $196 to about $169 by Friday’s close.
Candy makers across the board are under pressure from tariffs, inflation and rising cocoa prices. Chocolate prices have increased nearly 30% since last Halloween and have increased nearly 78% over the past five years, CNBC reports.
CEO Kirk Tanner took the helm at Hershey in August. Mr. Kramer called Mr. Tanner professional and noted that he had previously served as CEO. wendy’s He served as an executive with the company for approximately 30 years. pepsico.
Mr. Kramer said he thought Hershey’s earnings report on Thursday looked quite positive. He noted that net sales exceeded expectations and that organic sales increased by 6.2%. Much of that growth is due to price increases, but that’s a good number for any packaged food company, especially since some analysts were expecting organic growth of about 3.6%, Cramer said.
But at the same time, he said Wall Street was disappointed that Hershey had “slightly” revised its full-year forecast upwards because the company beat its earnings by a large margin. Management also seemed cautious on the earnings call, Cramer continued, noting that the company reported a slower-than-expected start to the Halloween season and weaker results in Mexico.
But Kramer noted that Hershey’s quarter was better than many other quarters reported in the past few years. He suggested the company is cautiously optimistic and doesn’t intend to “collectively stick our necks out for something we may not be able to deliver.” He added that Tanner is just starting in his role and management emphasizes that “they’re playing for the long term,” not necessarily this quarter or next year.
“Honestly, if you don’t have any role at Hershey and you want to diversify away from pure technology, which is what a lot of other companies are trying to do, that’s attractive,” he said. “With stocks at their lowest levels since early July, it’s tempting to take a small position here.”
Hershey did not immediately respond to a request for comment.
