Zacks_Analysts' Blog : S&P Rates Hershey's Notes - Analyst Blog

Recently, the rating agency Standard & Poor's (S&P) has provided an investment grade rating to the notes offering announced by The Hershey Company (HSY), due 2016.

According to the regulatory filing, Hershey had made a public offering to sell 1.5% notes due 2016. Further, the notes were priced at $250 million. In addition, the yield to maturity is 1.549%.

The net proceeds after selling the notes are expected to be utilized for general corporate purposes.

The rating agency Standard & Poor's has also provided an investment-grade "A" rating on Hershey, stating that Hershey holds a strong market position in the U.S. chocolate and confectionary market. Further, the company has solid cash flows and has robust business risk profile.

Hershey also posted in-line results on October 27 with adjusted earnings of 84 cents a share in its third-quarter 2011. However, it surpassed the prior-year adjusted earnings of 79 cents per share. The company also expects 2011 adjusted earnings per share to increase around 10% for the full year. Further, Hershey’s expects its 2012 adjusted earnings per share to be within the company’s long-term 6%-8% objective.

Exceeding the initial expectations, Hershey’s net sales also rose 5% to $1.6 billion, buoyed by volume gains from Halloween and strong response from its new products of Reese's Minis and Hershey's Drops.

Based in Pennsylvania, Hershey engages in manufacturing, marketing, selling and distributing various chocolate and confectionery products, pantry items and gum and mint refreshment products worldwide.

Hershey, which competes with Kraft Foods Inc. (KFT), currently maintains a long-term Neutral recommendation on the shares. Additionally, the quantitative Zacks Rank for Hershey is “3”, which is equivalent to a short-term hold rating.