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Hershey Drops Out Of 2016 CAGNY Conference; Analyst Questions If Consolidation Is Coming

Hershey Drops Out Of 2016 CAGNY Conference; Analyst Questions If Consolidation Is Coming
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Consumer Analyst Group of New York had confirmed on Friday to Benzinga, that Hershey Co (NYSE: HSY) will not be presenting at the upcoming February 15-19 CAGNY 2016 Conference.

Investors may find Hershey more appealing, as some analysts question if consolidation may be in the company's future. Large packaged-food companies have been faced with recent threats such as slowing sales as consumers are beginning to shift toward less-processed options. 

On Friday, a Credit Suisse note discussed the conference. "Feb 17th HSY is listed...Hershey has decided to drop out of the 2016 Consumer Analyst Group of New York conference and conduct its own analyst day instead later in the year," an analyst wrote.

"This decision will lead to a fair degree of speculation on the fate of CEO J.P. Bilbrey and whether the company will participate in the growing industry trend toward consolidation," they added.

Getting To Know Buck

Michele Buck was Hershey's president of its new United States Snacks Group in 2005. Buck was later moved to the position of chief marketing officer of the United States Commercial Group. Disappointing results followed the move after the company could not compete in the highly competitive cookie market. A management change in 2007 was later prompted, and a renewed focus was placed back on Hershey's core chocolate business.

Now after a decade later, Hershey is getting serious about snacks again. Ms. Buck, now president of Hershey North America, will lead its United States Snacks Group again. With Hershey's latest acquisition in 2014 of Krave Pure Foods, Inc., a maker of premium meat snacks, Wall Street analysts recently have questioned the success of the new move.

Look Back To 2015 CAGNY Conference For Answers

At the 2015 annual conference of the Consumer Analyst Group of New York, Buck stressed the company's unparalleled capacity to successfully execute with retailers. "As consumers are snacking even more, we have an opportunity to further broaden our portfolio across the snacking continuum," she said.

"We will leverage new and existing brands to expand beyond treats into wholesome sweet snacks and protein-based portable nutrition, both on trend and high-growth areas. Snacking is a natural extension that allows us to leverage our advanced capabilities, from sourcing, manufacturing, and food science, to our channel ubiquity and brand marketing expertise.

"We will drive incremental growth by fulfilling consumer needs in adjacent high-growth categories."

What Else To Know

According to FactSet as of Friday, the S&P 500's Food Product Index currently trades at 22.6 times its companies' past 12 months of earnings, versus the S&P 500's 18.5 price/earnings ratio. Emerging markets valuations are even more stretched, which are vulnerable if the United States raises rates.

Investors may be deterred by all of this, as some view food stocks as becoming expensive in comparison with the broader market.

"If another significant emerging-markets downturn causes investors to abandon the asset class en masse, these defensives stocks with stretched valuations have the greatest distance to fall before putting in a floor," stated Joe Gubler, portfolio manager at Causeway Emerging Markets Fund, with $2 billion in assets.

Latest Ratings for HSY

Oct 2017UBSMaintainsNeutral
Oct 2017CitigroupMaintainsBuy
Aug 2017BernsteinUpgradesMarket PerformOutperform

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