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The Hershey Company (HSY) is not satisfied with the company's recent results and has replaced eight directors and the CEO. The new management team, led by David West, is expected to recharge growth at Hershey's in addition to continuing with the three-year Global Supply Chain transformation plan.
Since the stock is at the low end of its historical valuation range, Hershey's stock is attractive and remains rated a Buy. The stock is currently trading at the lower end of the five year P/E range at 18. Hershey's EPS growth should begin re-accelerating in mid-2008 by focusing on core products, introducing new products, reducing costs, and expanding operations overseas.
We expect Hershey's stock to trade in a P/E multiple range of 20 to 31. Despite the recent earnings disappointments and reduced earnings guidance in 2007, the stock appears to be attractively valued at the current levels. The stock price target of $52 is based on a P/E multiple of 28 times our depressed 2008 EPS estimate.
Read the full analyst report on HSY.
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