Hershey's Q2 2026 GAAP EPS rose 629% to $2.26, mostly on a hedging swing; adjusted EPS rose 57% to $1.90 as ~12% higher prices and cheaper cocoa outweighed an ~8% volume drop.
Revenue
$2.8B
+6.6% YoY
Net income
$458M
+629.7% YoY
Diluted EPS
$2.26
+629.0% YoY
Operating margin
23.1%
Overview
Hershey's second quarter of 2026 (the three months to June 28, 2026) looks spectacular at first glance: net income rose from $62.7 million to $457.7 million and diluted earnings per share (EPS) went from $0.31 to $2.26, up 629%. Most of that jump is an accounting swing rather than a change in how much candy Hershey sold or what it earned per bar. The underlying story is narrower and still good: prices up about 12%, volumes down about 8%, and cheaper cocoa starting to flow into costs, which together lifted adjusted EPS 57% to $1.90.
Net sales rose 6.6% to $2,787.3 million. Stripping out the LesserEvil snack acquisition (closed November 2025, worth 2.7 points of growth) and a 0.3-point currency benefit, "organic" sales — sales from businesses Hershey already owned, at constant exchange rates — grew 3.6%.
Source: Hershey Form 10-Q for the quarter ended June 28, 2026, and the July 30, 2026 earnings release (Exhibit 99.1) for adjusted figures and the price/volume split.
Why GAAP EPS and adjusted EPS tell different stories
Hershey buys cocoa, sugar and other ingredients using futures contracts — agreements to buy at a set price later — often for inventory it will use a year or more out. Under accounting rules those contracts are revalued to market price every quarter ("mark-to-market"), and the gain or loss hits reported profit immediately, long before the chocolate made with that cocoa is sold. Hershey keeps these swings out of its segment results and its "adjusted" figures until the related inventory is actually used.
In Q2 2025 those contracts produced a $200.7 million pre-tax loss ($0.98 per share). In Q2 2026 they produced a $102.9 million gain ($0.52 per share). That swing alone accounts for $1.50 of the $1.95 increase in GAAP EPS. The tax line compounds it: the 2025 effective tax rate of 57.9% was inflated by tax reserves and by how the hedging losses fell across countries with different tax rates; on an adjusted basis the rate fell from 32.8% to 24.2%, still a real tailwind, partly from a one-time reserve increase in the prior-year quarter.
So the fairer comparison is adjusted EPS: $1.90 vs. $1.21, up 57%. Adjusted operating profit rose 37.3% to $563.5 million.
Price did all the work; volume went backwards
Segment
Reported sales growth
Organic growth
Price
Volume/mix
Segment margin (Q2 2026 vs. Q2 2025)
North America Confectionery
+4.2%
+4.2%
~+14%
~−10%
32.5% vs. 24.2%
North America Salty Snacks
+22.9%
+0.6%
~−3%
~+4%
16.1% vs. 21.1%
International
+5.7%
+2.1%
~+10%
~−8%
−2.3% vs. 9.3%
Total company
+6.6%
+3.6%
~+12%
~−8%
—
North America Confectionery (78% of sales — chocolate and other candy, gum and mints in the US and Canada) raised prices about 14%, largely from the pricing action announced in 2025, and shipped about 10% less. The 10-Q attributes the volume drop "primarily" to price elasticity — shoppers buying less when prices go up. Segment income still jumped 40.1% to $705.8 million because the higher prices landed at the same time as lower commodity costs, factory productivity, savings from Hershey's cost program (the "Advancing Agility & Automation," or AAA, initiative) and tariff refunds, partly offset by higher logistics costs.
The consumer data is mixed and depends on the window. The 10-Q says US candy, mint and gum retail sales measured at checkout fell 8.6% over the quarter, with a market-share decline. The earnings release, using a 12-week window to July 19 that strips out the shift in Easter timing, shows a 3.7% gain — but Hershey still lost share, which it put down to "increased competitive innovation." Either way, rivals are taking share while Hershey leans on price.
North America Salty Snacks (SkinnyPop, Dot's Homestyle Pretzels, and now LesserEvil) is the opposite picture. Sales rose 22.9%, but about 22 points of that came from LesserEvil; organic growth was just 0.6%. Volume rose about 4%, which the release calls "below expectations" because of execution problems on multipacks and Dot's pretzels, and prices fell about 3% because of heavier trade promotion (discounts funded for retailers) behind new products. Segment income fell 5.9% to $62.6 million, and margin dropped 5 points to 16.1%, on higher logistics costs, lower pricing, more marketing and unfavorable mix.
International (8% of sales) swung to a $5.1 million loss from $19.8 million of income. Pricing added about 10% and currency about 4%, but volume fell about 8% — partly elasticity, partly customers running down stock that was shipped early in Q1 to hedge against geopolitical risk. Higher raw material and manufacturing costs and more advertising did the rest.
Cocoa: the cost tailwind is real but arrives slowly
The 10-Q says cocoa futures averaged $1.80 per pound in the first half of 2026, about 51% below the 2025 average of $3.65, and describes the supply outlook as having "continued to improve substantially," with the 2025-26 season expected to show a large surplus. But Hershey typically hedges 3 to 24 months ahead, so the company's own cocoa cost lags the market. Adjusted gross margin rose 3.5 points to 41.6% — the release credits price, "lower net commodity costs" and productivity savings, offset by higher logistics costs and unfavorable mix. Over the first six months, adjusted gross margin was 41.0% vs. 39.7% a year earlier.
That lag cuts both ways for investors: margins should keep benefiting as older, pricier hedges roll off, but retailers and consumers will also see cocoa prices down by half and push back on the 2025 price increases.
Cash, debt and shareholder returns
Operating cash flow for the first half was $888.1 million, up from $508.9 million, helped by timing of prepaid expenses and higher earnings, partly offset by $207.0 million of cash taxes (vs. $65.5 million) and more cash tied up in receivables.
Hershey spent $439.4 million on buybacks in the first half (none a year earlier) and $574.4 million on dividends. The board added a new $500 million buyback authorization in June 2026, on top of about $270 million remaining under the 2023 program.
Total debt was about $5.6 billion at quarter-end, including $500 million of 2.300% notes due August 15, 2026.
Takeaway: Strip out the hedging swing and Hershey's quarter was a pricing story: North American candy prices up ~14%, volumes down ~10%, and share still slipping. Profit growth is strong now because those higher prices coincide with cocoa costs falling from record levels — the open question for 2027 is how much of that price Hershey can keep once shoppers and retailers notice cocoa has halved.
Outlook
Management narrowed its 2026 guidance in the July 30 release (it excludes any future tariff rebates):
2026 guidance
Prior
Current
Net sales growth (incl. ~1.5 pts from LesserEvil)
4% to 5%
4.5% to 5%
Organic net sales growth
2.5% to 3.5%
3% to 3.5%
Reported EPS growth
79% to 89%
82% to 89% ($7.89–$8.17)
Adjusted EPS growth
30% to 35%
32.5% to 35% ($8.36–$8.52)
Hershey also expects a 25%–27% tax rate, $200–210 million of interest expense, $425–475 million of capital spending and about $100 million of AAA savings. Adjusted EPS guidance assumes no mark-to-market gains or losses, since those cannot be forecast.
Our read: first-half adjusted EPS was $4.25, so the guidance implies $4.11–$4.27 for the second half against $3.00 a year earlier (2025 full-year adjusted EPS of $6.31 minus $3.31 in the first half) — a 37%–42% increase, even faster than the first half's 28.4%. Sales, by contrast, are guided to slow: first-half organic growth was 5.8%, above the full-year 3%–3.5% range, so the second half has to come in well below it. That is a forecast of profit growth coming from cheaper cocoa and cost savings rather than from selling more, which is consistent with what Q2 showed. The risks to watch are further volume erosion in North American candy, a salty snacks business that is growing sales mostly by acquisition while margins shrink, and an International segment that is currently losing money.