Hershey (HSY) Financials

Hershey’s latest quarterly results show a business that is still highly profitable, but one that is feeling margin pressure and balance-sheet strain compared with where it was a year ago. In Q1 2026, revenue rose modestly year over year, earnings improved, and operating cash flow remained healthy. However, rising operating costs, higher debt, and a lower cash balance versus recent quarters suggest the company is working harder to generate growth.

Quarterly trend overview

• Q1 2026 revenue increased to $3.10 billion from $2.81 billion in Q1 2025, showing steady top-line growth.
• Gross profit improved to $1.22 billion from $944 million a year ago, indicating better absolute profit generation.
• Operating income rose to $640.7 million from $369.2 million in Q1 2025, a strong year-over-year improvement.
• Q1 2026 diluted EPS increased to $4.12 from $2.13 in Q1 2025.
• Operating cash flow in Q1 2026 was $468.8 million, comfortably positive and supportive of dividends and capital spending.
• Shares outstanding were essentially flat year over year, so earnings growth was driven by operations rather than buybacks.
• The company continues to pay a meaningful dividend, with Q1 2026 dividends of $2.772 per share.
• Inventory remains a major working-capital item, at $1.43 billion in Q1 2026, which is important for a consumer staples manufacturer to manage carefully.
• SG&A expenses climbed to $576.0 million in Q1 2026 from $558.7 million in Q1 2025, indicating expense pressure.
• Interest income/expense and other non-operating items were a drag, with total other income/(expense), net of -$48.0 million in Q1 2026.

Margin and profitability trends

Hershey’s profitability has improved on a year-over-year basis, but margins have been volatile over the last four years. In Q1 2026, revenue grew faster than cost of revenue, which helped gross profit expand. Still, operating expenses remain elevated. Cost of revenue in Q1 2026 was $1.88 billion, or about 60.6% of revenue, leaving a gross margin of roughly 39.4%. That is solid, but it shows how sensitive Hershey’s earnings are to input costs and pricing.

Compared with Q1 2025, net income more than doubled to $435.1 million from $224.2 million. On a longer-term basis, however, the company’s quarterly earnings have swung around significantly, especially in 2024 and 2025, reflecting higher costs and financing charges.

Cash flow and capital allocation

Cash generation remains a strength. Hershey produced $468.8 million in operating cash flow in Q1 2026, which is down from the unusually strong $926.6 million in Q4 2025 but still healthy. The company also continued to invest in the business, with $114.6 million spent on property, plant and equipment in the quarter.

At the same time, Hershey returned a large amount of cash to shareholders. In Q1 2026 it paid $288.0 million in dividends and repurchased $69.3 million of common equity. That supports the investment case for income-focused investors, but it also means less cash is being retained to reduce debt or rebuild liquidity.

Balance sheet trends

Hershey’s balance sheet has weakened relative to early 2025. Total assets were $13.84 billion in Q1 2026, up from $13.57 billion in Q3 2025, but cash fell to $877.0 million from $1.16 billion in Q3 2025 and $1.52 billion in Q1 2025. Meanwhile, total debt remained elevated at:

• $673.5 million in short-term debt
• $4.68 billion in long-term debt

That leaves Hershey with a sizable leverage burden for a consumer staples company. Total liabilities were $9.11 billion, compared with common equity of $4.73 billion. The company is still firmly profitable, but debt levels and the reduction in cash make the capital structure less flexible than it was a year ago.

What retail investors should take away

• Hershey remains a highly profitable branded consumer company with strong cash generation.
• Q1 2026 showed better revenue, higher operating income, and stronger EPS year over year.
• The dividend remains well supported by ongoing operating cash flow.
• The business is still dependent on careful working-capital management, especially inventory and payables.
• Debt is still high, and cash has come down from earlier periods.
• Operating costs and SG&A remain a headwind to margin expansion.

Bottom line: Hershey’s latest quarter was solid, not spectacular. The company is still doing what investors expect from a premium food brand: generating profits, cash, and dividends. But compared with earlier periods, the margin structure and balance sheet look less comfortable, so future upside may depend on continued pricing power and tighter cost control.