The Hershey Company (HSY) delivered a solid quarterly performance Thursday that showed consumers are still willing to pay up for chocolate, even if they're buying a bit less of it. The confectionery maker topped Wall Street's expectations on both the top and bottom lines, then sweetened the deal with a dividend hike and an optimistic 2026 forecast.

Fourth-quarter adjusted earnings came in at $1.71 per share, crushing the analyst consensus of $1.40. Sales hit $3.09 billion, up 7% year over year and comfortably ahead of the $2.98 billion Street estimate. Organic, constant-currency net sales climbed 5.7%, with acquisitions contributing another 1.2 percentage points and currency adding a small 0.1-point boost.

But here's the catch: volumes declined in both Hershey's North America Confectionery and International segments as price-conscious consumers pulled back. So the sales growth came from pricing power and acquisitions, not from people eating more candy bars. That's the story of consumer goods in 2025—companies can still charge more, but shoppers are starting to vote with their wallets.

Segment Breakdown

North America Confectionery, the company's bread and butter, generated $2.48 billion in sales, up 5.3% from last year. North America Salty Snacks had an even better quarter, with sales jumping 28% to $357 million. The International segment, meanwhile, was essentially flat, inching up just 0.4% to $255.6 million.

Those elasticity-driven volume declines Hershey mentioned? That's corporate speak for "when we raised prices, people bought less stuff." It's a delicate balance, and so far Hershey is managing it reasonably well.

Margin Squeeze

The pressure points showed up clearly in the margin numbers. Adjusted gross margin dropped a hefty 650 basis points to 38.3%, weighed down by higher commodity costs, additional tariff expenses, lower volumes, and an inventory valuation timing headwind. Cocoa prices have been particularly brutal lately, and tariffs aren't helping matters.

Adjusted operating profit fell 24% to $529.3 million, with the operating margin sliding 700 basis points to 17.1%. Beyond commodities and tariffs, Hershey also faced increased selling, marketing, and administrative expenses. The company ended the quarter with $925.9 million in cash and equivalents on the balance sheet.

Dividend Boost

Despite the margin headwinds, Hershey raised its quarterly dividend 6% to $1.452 per share from $1.37. The dividend will be paid March 16, 2026, to shareholders of record as of February 17, 2026. It's a vote of confidence in the business, even as costs remain elevated.

2026 Outlook

Hershey's fiscal 2026 guidance came in well ahead of expectations. The company forecasts adjusted earnings of $8.20 to $8.52 per share on sales of $12.16 billion to $12.28 billion. Analysts had been modeling $7.15 per share on $12.01 billion in revenue, so this represents a meaningful beat. GAAP earnings are projected at $7.77 to $8.19 per share, also above the $7.08 consensus.

Investors liked what they heard. Hershey (HSY) shares surged 7.03% to $220.26 on Thursday, hitting a new 52-week high. It's a reminder that in today's market, companies that can grow sales, manage costs reasonably well, and beat expectations get rewarded—even when the underlying fundamentals are a bit messy.