Hershey Co (NYSE:HSY) early Friday posted mixed fourth quarter earnings results, but offered a strong profit outlook for 2017 that was much higher than analysts had anticipated.

Written by StockNews.com

The Hershey, PA-based candy producer reported adjusted Q4 EPS of $1.17, which was $0.09 better than the Wall Street consensus view of $1.08. Revenues rose 3.2% from last year to $1.97 billion, narrowly missing analysts’ $1.98 billion view. Excluding currency effects, HSY noted that net sales would have increased by 3.7%.

Hershey’s adjusted gross margin edged slightly lower in the latest period, to 44.5%, compared with 45.0% in Q4 2015. That decline was caused by “unfavorable supply chain costs and trade,” but “partially offset by supply chain productivity and costs savings initiatives,” said the company.

Looking ahead, HSY forecast adjusted full-year 2017 EPS to range from $4.72 to $4.81, which would be much higher than the $4.64 that analysts are currently looking for. 2017 revenues are seen gaining 2% to 3% to about $7.59 to $7.66 billion, in-line with Wall Street’s $7.62 billion estimate.

The company commented via press release:

“I’m pleased with our fourth-quarter results, particularly operating profit that was greater than our expectations, and marketplace performance, which sequentially improved throughout the year, resulting in an increase in our candy, mint and gum (CMG) market share,” said John P. Bilbrey, Chairman, President and Chief Executive Officer, The Hershey Company. “Additionally, the implementation of efficiency initiatives related to the review of our cost structure resulted in lower selling, marketing and administrative (SM&A) expenses versus our forecast. These initiatives, which we will discuss more broadly at our investor update on March 1, 2017, enabled us to deliver additional operating income growth earlier than planned resulting in 2016 earnings per share-diluted ahead of our forecast.”

Hershey Co shares were mostly flat in premarket trading Friday. Year-to-date, HSY has gained 2.09%, versus a 1.90% rise in the benchmark S&P 500 index during the same period.

HSY currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #3 of 62 stocks in the Food Makers category.