Public Offering of Hershey Company - Essay Example

The nominal value of the company’s shares is $ 0.001 but with the immense growth displayed by the company over decades the company’s share price has grown significantly and it is presently $97.06 (as of June 2, 2014) Following is the trend of the share price observed on the day of recording the company’s share price.

Overview of Hershey Company (The HSY Company, 2014)

            Such an increase in the share price is reflective of the growth indicated by the financial results of the company.

Description

2013

2012

2011

2010

Net Sales

7,146,079

6,644,252

6,080,788

5,671,009

Net Income

820,470

660,931

628,962

509,799

Total Assets

5,357,488

4,754,839

4,407,094

4,267,627

Stockholder’s equity

1,616,052

1,048,373

880,943

945,896

(The Hershey Company - Annual report, 2013)

            The above figures prove that the company has been growing each year. Hershey has not just improved its figures but it has excelled in its operational efficiency as well; in 2010, the ratio of income to sales was 8.9% against 2013 when the ratio value was 11.50%.

            Below mentioned are some more financial highlights of Hershey, which makes it worth calling for a public offering.

Financial ratios of Hershey (Key Statistics, 2013)

            The price/Book ratio indicates high anticipations by the market related to the company's performance. The high return on assets of 16.68% is accompanied by a high return on equity of 59.75%. These return ratios indicate that the company has successfully executed the strategy of gaining high returns. This makes it more attractive for public offerings because high returns are more attractive to investors. Such high return rates are supported by underlying efficient operating and profit ratios of 19.06% and 11.56%. The difference between operating and profit indicates that the company has fewer overhead/administrative costs, which are only because of its cost minimization techniques. As per Hershey’s annual report, the company is simultaneously investing in more than five countries in research and development for the betterment of its production processes so that the quality and costs could be improved. In addition to this, the company has a decent market share despite huge competitors in the market.

Conclusion:

            As discussed above, Hershey is an advancing company, which is sustaining itself against tough competition in the market. In spite of the growth over the period of the years, it has still not become the market leader. It only has a market capitalization of 21%. If more funds are injected into the company, Hershey will definitely gain more share and business in the market, which will benefit the company, its employees, and its shareholders on a wider scale.