Deutsche Bank Comments On Hershey's 1Q11 Results

According to Deutsche Bank, the Hershey Company

reported opr. 1Q11 EPS of $0.72 vs. $0.69 est. and cons. Of $0.70. Results excl. $0.02 of charges (restructuring, other). Deutsche Bank said that sales were up 11% vs. +3-4% est mostly due to volume. Sales were helped by early 4Q10 shipments, changed retailer order patterns. “Hershey noted market share in measured channels was +50 bps during the latest 12-week period. Advertising was up about 30%. EBIT was up 13% to $286 mil vs. our $270 mil est. EBIT margins came in at 18.3% vs. our 18.5% forecast. COGS (excl. D&A) were 54.5% of sales, flat vs. the year ago quarter. SG&A was 24.1% of sales vs. our 24.2% forecast. Versus our forecast: int exp was in line, tax rate limited EPS $0.02, shares outstanding were in line. Mgmt reiterated 2011 guidance at the high end of LT target ranges incl. net sales growth +3-5% and adj. EPS growth +6-8%. Hershey repurchased $100 mil in stock in the 1Q11 while boosting the authorization to $250 mil. We note this is already in our model. We expect the stock's early trading to be a balance between a very strong top line vs. flat gross margins and high relative valuation. We retain our HOLD rating.” Hershey Company closed yesterday at $56.75.