$HSY · HERSHEY CO
Hershey filed its Q3 FY2026 10-Q, reporting net income of $580.8M ($2.88 diluted EPS) on revenue of $3.276B (+3.0% YoY). Gross margin rebounded sharply to 46.1% from 32.6% a year ago as cost of sales fell 17.7%, while operating profit nearly doubled to $817.7M. Nine-month net income reached $1.47B versus $563.2M in the prior-year period.
- Q3 net income surged 110.2% YoY to $580.8M, with diluted EPS of $2.88 vs. $1.36 a year ago.
- Gross margin expanded to 46.1% from 32.6% in Q3 2025, driven by cost of sales dropping 17.7%.
- Revenue rose 3.0% to $3.276B, with favorable price realization of approximately 11% across all segments.
- Nine-month operating profit more than doubled to $2.10B, with operating margin reaching 22.9% vs. 11.6%.
- Commodities derivatives swung to a $138.8M gain in the first nine months vs. a $52.7M loss last year.
Stock is up 0.28% since filing at $162.22, a muted reaction for a quarter where net income more than doubled — suggesting the margin recovery from collapsing cocoa costs was largely priced in or offset by volume concerns.
Hershey's margin recovery is one of the most dramatic in packaged food this cycle — gross margin jumped 13.5 percentage points in a single quarter, flipping the P&L from crisis to record profitability.
Hershey's margin recovery mirrors broader packaged-food trends where pricing actions and easing input costs are restoring profitability, though the 11% price realization suggests consumers are still absorbing significant increases.
Commodity price volatility remains a key risk — the $138.8M YTD gain on commodity derivatives could reverse if cocoa and sugar prices spike again. Tariffs and retaliatory tariffs are explicitly flagged as ongoing headwinds to supply chain costs.