Hershey Targets $400M in Cost Savings: Where Does It Stand Now?

The Hershey Company (HSY) is sharpening focus on efficiency as it raises the bar for the Advancing Automation and Agility (Triple A) transformation program. In the second-quarter 2025 update, the company said it now expects $150 million in net savings this year, up from the earlier $125 million forecast, and has lifted the three-year program target to $400 million from $350 million. The savings are spread across the cost of goods sold and selling, marketing and administrative expenses.A central pillar of this strategy is Smart Complexity, an initiative designed to simplify packaging and product assortments, streamline manufacturing and leverage technology-enabled automation. The leadership emphasized that these measures not only cut costs but also create efficiencies that benefit both the company and its retail partners.With cocoa inflation and tariffs weighing on profitability, Hershey’s margins remain under strain. Adjusted gross margin slipped 510 basis points (bps) to 38.1% in the second quarter of 2025. The expanded savings pipeline is meant to help offset these pressures and support margin recovery over time. Management noted that, taken together, pricing actions, procurement strategies and productivity initiatives could restore more than 500 bps of adjusted gross margin in 2026.For now, Hershey’s execution on the cost front is moving ahead of schedule, with visible gains in manufacturing and administrative efficiency. The raised target reflects confidence that its productivity engine can deliver more than initially anticipated. Even with commodity volatility creating headwinds, the company’s progress signals a stronger foundation for restoring margins and sustaining operational discipline.Hershey’s Zacks Rank & Share Price PerformanceShares of this Zacks Rank #3 (Hold) company have lost 2.3% in the past month compared with the industry’s 1.5% decline. HSY has also underperformed the broader Consumer Staples sector and the S&P 500 index’s growth of 1.7% and 2%, respectively, during the same period.HSY Stock's Past Month PerformanceImage Source: Zacks Investment ResearchIs HSY a Value Play Stock?Hershey currently trades at a forward 12-month P/E ratio of 29.09 compared with the industry average of 23.49 and the sector’s 17.12. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.HSY Valuation PictureImage Source: Zacks Investment ResearchStocks to ConsiderPost Holdings, Inc. (POST) operates as a consumer-packaged goods holding company in the United States and internationally. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 3.1% and 11%, respectively, from the prior-year levels. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.The Chefs' Warehouse, Inc. (CHEF) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently sports a Zacks Rank of 1. CHEF delivered a trailing four-quarter earnings surprise of 11.3%, on average.The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6.6% and 19.1%, respectively, from the prior-year levels. Laird Superfood, Inc. (LSF) manufactures and markets plant-based, natural and functional food in the United States. It has a Zacks Rank #2 (Buy) at present. LSF delivered a trailing four-quarter earnings surprise of 11.3%, on average. The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and earnings indicates growth of 21% and 23.8%, respectively, from the prior-year levels.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hershey Company (The) (HSY): Free Stock Analysis Report The Chefs' Warehouse, Inc. (CHEF): Free Stock Analysis Report Post Holdings, Inc. (POST): Free Stock Analysis Report Laird Superfood, Inc. (LSF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks