S&P Global Ratings has revised its view on The Hershey Co. to stable from negative and has reaffirmed the company’s 'A' long-term issuer credit rating along with 'A-1' short-term and commercial paper ratings. The agency cited Hershey’s ability to keep leverage at about 2x or lower following its acquisition of LesserEvil despite recent pressures from elevated cocoa costs and soft consumer sentiment.
In its assessment S&P projects a rebound in profitability. It expects Hershey to increase EBITDA by more than 20% in fiscal 2026. That improvement is forecast to come from a combination of a low single digit percent rise in organic revenue and lower costs.
Hershey recorded an adjusted EBITDA decline of more than 12% in fiscal 2025. S&P attributed that drop largely to substantially higher cocoa costs and tariffs. The ratings agency sees a reversal of those headwinds in 2026, forecasting roughly a 350 basis-point expansion in EBITDA margins. The margin pickup is expected to be driven by several factors S&P identified - cocoa deflation, the elimination of tariffs on cocoa and other agricultural commodities in November 2025, the benefit of higher pricing and continued productivity savings.
Movements in the cocoa market figure prominently in the analysis. Cocoa futures have moved lower over the last 12 months, declining in the first quarter of 2026 to under $3,000 per ton from a peak of over $12,000 per ton in 2024. Hershey employs derivatives and forward purchases with horizons from three to 24 months to hedge its commodity price exposure, a program that S&P says has largely locked in cocoa prices for 2026 and provided visibility into 2027.
That said, cocoa prices have firmed since the end of April, trading above $4,000 per ton amid concerns about adverse weather and geopolitical tensions in West Africa. S&P’s outlook references these recent price moves, but the agency’s base case incorporates expected cocoa deflation and the tariff removals mentioned earlier.
On the cash flow and balance-sheet side, Hershey generated more than $1.7 billion of free operating cash flow in 2025. That cash generation more than covered the company’s $1.1 billion dividend and enabled more than $600 million of net debt reduction. In the first quarter of 2026 the company repurchased $69 million of shares.
S&P’s projections call for Hershey to complete $300 million of share repurchases in 2026 and to pay $1.1 billion in dividends for the year, amounts the agency expects will be more than covered by a repeat of the roughly $1.7 billion of free operating cash flow.
The stable outlook reflects S&P’s view that Hershey can expand profits over both 2026 and 2027 while maintaining leverage at about 2x or below. The ratings agency further forecasts the company will deleverage to around 1.5x in fiscal 2026, which it says would provide the company increased flexibility to pursue acquisitions in better-for-you snacking categories.
Overall, S&P’s action preserves Hershey’s current credit ratings while shifting the outlook to stable on the expectation of improving margins, continued cash generation and a lower leverage profile than had been factored into the prior negative outlook.