HSY

Hershey ($HSY) New CEO & CGO Buy $371K vs Former Execs' $20M Sales - Turnaround Confidence?

11/25/2025 22:14

Hershey ($HSY) executives sent a contrasting signal to the pattern of consistent insider selling when new management made stock purchases in late November. Newly appointed CEO Kirk Tanner, who joined from Wendy's in July, purchased 2,000 shares at $185.46 per share on November 21, investing approximately $371,000, while Chief Growth Officer Stacy Taffet bought 200 shares at $186.19 on the same day. Hershey, founded in 1894, is a global confectionery leader with iconic brands including Hershey's, Reese's, Kisses, and others, boasting a market cap of approximately $37.9 billion. The company operates through three main segments: North America Confectionery, North America Salty Snacks, and International Markets, exporting to about 80 countries. The recent completion of the LesserEvil acquisition further expands its healthier snack portfolio. These executive purchases starkly contrast the selling pattern that dominated insider trading since 2024. Of 36 insider transactions recorded from June 2024 to September 2025, 34 were sales. Former Chairman Michele Buck sold over $20 million worth of shares from August 2024 to July 2025, while SVP Steven Voskuil maintained a regular selling pattern in the $180-190 range. The timing of Tanner and Taffet's purchases coincides with the company's acute financial dilemma. Q3 2025 results showed revenue growth of 6.5% to $3.18 billion, beating consensus of $3.13 billion, but earnings per share plummeted 44% to $1.30 from $2.34 year-over-year. This deterioration in profitability despite revenue growth raises margin concerns. The profitability pressure is compounded by a high debt-to-equity ratio of 125.76%. With total debt of $5.74 billion against cash of only $1.16 billion, financial flexibility remains constrained. The PEG ratio of 48.57 suggests extreme overvaluation relative to growth prospects, heightening investor caution. Industry headwinds persist across the sector. Cocoa price inflation continues pressuring costs, while the proliferation of GLP-1 diet drugs raises concerns about reduced snack demand. Bernstein downgraded Hershey to 'market-perform' in October 2024, citing GLP-1 impact. Halloween candy sales also disappointed due to weather and timing factors. Yet the new management's purchases signal several positive developments. First, CEO Tanner brings successful turnaround experience from Wendy's, positioning him to drive margin improvement and portfolio diversification at Hershey. Second, the North America Salty Snacks segment grew 10% in Q3, demonstrating expansion potential beyond traditional confectionery. Third, international business grew 12.1%, showing geographic diversification benefits. Investors should monitor key indicators for direction. Positive signals include new management's margin improvement plan announcements, continued double-digit growth in salty snacks, and debt-to-equity improvement below 120%. Warning signs include continued EPS decline, debt ratio exceeding 130%, or stock falling below $170. The most likely scenario sees margin pressure continuing through late 2025, with shares trading in the current $180-190 range. An optimistic scenario could see the new management's efficiency plans drive EPS recovery from 2026, potentially pushing shares above $200. The risk scenario involves combined cocoa inflation and demand softening driving shares toward the $160s. In conclusion, Hershey stands at a crossroads. While new management's purchases demonstrate confidence in long-term value, near-term financial challenges and industry headwinds warrant cautious positioning. The company's ability to recover margins and improve debt management will be key determinants of future investment appeal.