Why Hershey’s Sneaky Volume Problem Could Spoil Its Q3 on Oct. 29?
Hershey has beaten earnings estimates five straight quarters, yet the stock keeps falling on report day. With Halloween shipments already out the door and volume erosion quietly worsening, Oct. 29 will reveal whether the candy giant's pricing magic is running…
Hershey (NYSE:HSY | HSY Price Prediction) reports third-quarter results on Thursday, Oct. 29. Pricing has carried the top line all year while shoppers buy less. I want to see whether volume is stabilizing as the Halloween season ramps up.
Record Pricing Is Masking a Shrinking Cart
Last quarter, Hershey posted adjusted EPS of $1.90 against a $1.43 consensus, and revenue rose 6.6% to $2.79B. Net price realization of about 12 points drove the gain. Volume fell roughly 8 points, much worse than the 2-point slip in the first quarter.
Margins recovered fast. Adjusted gross margin expanded 350 bps to 41.6%, and management narrowed full-year adjusted EPS guidance to $8.36 to $8.52.
The stock has not rewarded the beats. Shares fell 3.63% on the Q2 report day, are down 4.69% year to date, and dropped 3.4% on Oct. 23. That same day, Barron’s argued that the consumer staples rally is masking Hershey’s deeply flawed fundamentals.
Consensus Expects Big Earnings Growth on Modest Sales
| Metric | Consensus Estimate | Year-Ago Actual | Implied YoY Growth |
|---|---|---|---|
| Q3 2026 Normalized EPS | $2.1142 | $1.30 | 62.6% |
| Q3 2026 Revenue | $3.25B | $3.18B | 2.2% |
| FY 2026 EPS | $8.4816 | $6.31 | 34.4% |
| FY 2026 Revenue | $12.28B | $11.69B | 5.1% |
Volume Trends Will Decide This Quarter
Start with the revenue math. Consensus calls for just 2.2% sales growth after 12 points of pricing last quarter. That thin gain suggests analysts expect volume to stay under pressure.
In July, management called elasticities “on track or slightly better.” Then-CFO Steven Voskuil also flagged possible periods of negative everyday confection retail sales growth in the second half. Over one point of Q3 merchandising shipments landed early in Q2, and last year’s Reese’s Oreo launch creates a tougher comparison.
I’ll watch Halloween closely. Hershey began shipping Halloween earlier and cited good visibility to orders. Market share matters too, since management said “year-to-date share dynamics have largely been driven by innovation.”
Salty snacks sales jumped 22.9% last quarter, but DOTS supply strain and spot freight squeezed margins. International swung to a $5.1M loss. Newly named CFO Dave Hulays and International President Amanda Almond should expect pointed questions on both.
On costs, Q3 laps the highest cocoa costs and tariffs of the prior year, which explains the steep EPS growth baked into consensus.
A Volume Turn Would Strengthen the 2027 Case
Hershey has beaten EPS estimates five straight quarters, yet the stock fell on report day in three of them. Management says its 2027 framework is “not solely resting on cocoa deflation” and lists volume recovery among its levers. If Q3 shows shoppers returning, the margin story gains a sturdier foundation. If volume keeps sliding, every beat looks borrowed from price, and you should keep an eye on the stock’s reaction accordingly.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
