Comments from Morningstar Analyst, Erin Lash , 10-Nov-2023. She has a fair value estimate of $197, so stock is trading at about a 10% discount to their FVE. Stock has been trading at above their FVE from mid-2018 till very recently, at times as high as 37%.

Consumers' penchant for confectionery and snacking fare has yet to fulfilled, as evidenced by the outsize organic sales growth Hershey has chalked up the past few quarters. But from our vantage point, this isn't merely a byproduct of a favorable demand environment. Rather, we applaud the strategic focus CEO Michele Buck has brought to bear over the past six years--ramping up investments in its core domestic brands while pulling back in its international arm (high-single-digit percentage of total sales,where we surmise it lacks a competitive edge).

However, competitive and macro concerns abound, ranging from potential volume degradation as a byproduct of increased usage of weight-loss drugs to whether penny-pinching consumers could leave confectionery fare on the shelf in favor of more essential, daily products. Further, cocoa, sugar, and labor costs remain elevated (with management calling for high-single-digit cost increases this year) and could dent profits. Despite these looming headwinds, we surmise Hershey is playing from a position of strength, given its dominant standing (controlling around 45% of the U.S. chocolate space, versus just low-single-digit marks for lower-priced private-label offerings) combined with the robust resources it maintains to ensure its lineup continues to evolve with consumer trends.

In this context, we’re encouraged that Hershey is firm in its commitment to funnel resources toward its brands, with advertising spending up around 20% in the third quarter; we think Hershey will expend a high-single-digit percentage of sales (nearly $1 billion) toward research, development, and marketing annually over the next 10 years. And even though management has been forthright that its innovation pipeline was a bit scant in fiscal 2023, this coincided with stepped-up spending to build out its capabilities and capacity (with capital expenditures set to approximate 7%-8% of sales, outpacing the less than 5% average that has historically characterized the business), which we see as prudent. And with these investments in the rear view, we think Hershey intends to flavor its mix over the coming quarters.

Interestingly Hershey's "ramping up investments in its core domestic brands while pulling back in its international arm". So investors should not be looking into emerging and other foreign markets for higher growth.

Also Morningstar analysts estimate that Nestle is trading at 83% of FVE, Mondelez 95% and HSY 91%.

Another point to note that Hershey charitable trust has veto power over any acquisition of Hershey. They blocked Mondelez from acquiring it in 2016. I believe Pennsylvania AG was also has the power to block acquisition of Hershey.

reuters.com - US hershey settlement