HSY

Hershey remains a genuinely high-quality franchise: the 10-K describes it as "the largest producer of quality chocolate in North America" and the "undisputed leader in U.S. confection," and the numbers back the moat — FY2025 revenue grew +4.4% to $11.7B (a fifth straight year of growth from $8.97B in FY2021), ROE is still 19.0%, and operating cash flow of $2.28B comfortably funds the $1.09B dividend and $455M of capex. Pricing power and brand strength are intact. This is not a broken business.

But the FY2025 income statement is alarming: net income fell -60.2% to $883M, gross profit dropped -26.0% (gross margin compressed to 33.5% from roughly 47% implied by the prior year), and operating income halved (-50.3%, operating margin 12.3%). With revenue still rising, this is a cost/input-margin problem, not a demand problem — consistent with the MD&A's emphasis on "end-to-end supply chain" sourcing and the move to "transform our supply chain capabilities." Two defensive signals stand out: management cut share buybacks to $0 in FY2025 (-100% YoY) while holding the dividend flat, and on the International segment it explicitly "reset our international investment strategy" amid an "uncertain macroeconomic environment" — both read as cash conservation under margin pressure.