By Evie Liu

Hershey stock soared on Thursday after the chocolate maker reported fourth-quarter results that beat expectations by large margins as the brand demonstrated strong pricing power despite a weaker consumer environment.

For the fourth quarter ended in December, Hershey's posted net revenue of $3.09 billion, up 7% from the same period a year ago and topping the consensus forecast of about $2.98 billion. Earnings came in at $1.71 per share, well above the $1.40 estimates but still way below the $2.69 from a year ago.

The better-than-expected results have boosted optimism among investors. Shares jumped 9% on Thursday to $224.38. Over the last several quarters, the company has consistently topped estimates, driving the stock 54% higher in the past 12 months.

Hershey's strong results came as many snack and beverage brands struggled with sluggish sales. After years of price increases driven by inflation, shoppers are buying fewer chips, sodas, and packaged snacks, or trading down to cheaper store brands. Interest in healthier eating, smaller portions, along with growing use of weight-loss drugs has further reduced demand.

But Hershey tells a different story. The chocolate company has raised prices for many of its products in the past year, but transaction volume didn't fall as much as consumers continued to enjoy small, affordable treat like chocolates while cutting back on big purchases. Strong brand loyalty also matters -- many shoppers stick with familiar names even when prices go up.

The company has seen strong sales growth in both confectionery and salty snacks. On the earnings call on Thursday, CEO Kirk Tanner pointed to product innovation, stepped-up investment in marketing, and international expansion as additional contributors to growth.

Cocoa -- the primary raw material for chocolate -- has been a significant factor in Hershey's performance. Cocoa prices spiked in 2023-2024 due to supply disruptions in West Africa and other structural supply challenges, squeezing Hershey's margins as costs rose faster than prices could be passed on to consumers.

Cocoa futures have moderated significantly from their highs since late 2025, which could help boost Hershey's margins in the future.

"We're glad to see that the cocoa financial markets have finally begun to reflect some of the fundamentals that we've been describing really for the last 18 months," said CFO Steven Voskuil on the earnings call, "As we look out, we continue to anticipate a larger supply surplus in 2025 and 2026, driven by supply expansion [...] as well as a contraction in global demand."

Still, management noted that Hershey's price hikes in 2025 doesn't fully cover the company's cocoa cost inflation in 2026, and that any tailwind from falling cocoa costs likely won't be felt until 2027.

Hershey management provided a strong outlook for 2026, projecting 4% to 5% net sales growth for the full year and adjusted earnings between $8.20 and $8.52 per share. That's 30% to 35% higher than the $6.31 in 2025 and well above Wall Street's consensus forecasts of $7.08 per share.

Still, investors have other concerns: Some states have implemented or are considering new rules that could ban shoppers from purchasing candy with food stamps. Hershey management said it's working with retailers to mitigate the impact. "It's pretty early days, but I would tell you it's a manageable headwind," said Tanner.

Write to Evie Liu at evie.liu@barrons.com

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February 05, 2026 16:28 ET (21:28 GMT)

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