Moody's Ratings has affirmed all ratings for The Hershey Company, maintaining the firm's A1 issuer rating and A1 senior unsecured rating, along with a Prime-1 commercial paper rating. Alongside the affirmations, Moody's revised its outlook on Hershey from negative to stable.
The rating agency said the outlook change reflects an expectation that margin expansion and stronger earnings will drive deleveraging to under 2.0x over the coming 12-18 months, down from the mid-2x leverage level reported for the period ended March 29, 2026. Moody's projects adjusted EBITDA to rise 30-35% in 2026, a jump the agency attributes primarily to the carryover impact of pricing actions taken by Hershey in 2025.
Moody's noted that cocoa costs are likely to remain modestly higher than 2025 levels in 2026 because Hershey's hedging program has locked in prices that were previously elevated. The agency outlined the recent trajectory of cocoa markets, saying prices fell from roughly $12,500 per tonne in 2024 to about $6,000 per tonne by late 2025, and further moderated to an approximate $3,000 to $4,000 per tonne range through May 2026. Because of hedging, Moody's expects Hershey will not fully capture the benefit of the lower spot prices until 2027, a year in which the agency forecasts adjusted EBITDA growth of 10-15%.
On top-line dynamics, Moody's anticipates organic revenue growth in 2026 will be principally driven by the pricing measures already implemented. The agency also expects ongoing pressure on confectionery volumes as consumers respond to those price increases and a generally cost-conscious environment. By contrast, sales in the salty snacks category are expected to expand at a mid-single-digit pace, supported by distribution gains and higher household penetration for brands such as Dot's and SkinnyPop.
Turning to liquidity and cash generation, Moody's recorded that Hershey held $877 million in cash as of March 29, 2026, and retains access to a fully undrawn $1.875 billion revolving credit facility that matures in October 2030. Free cash flow after dividends is forecast by the agency to be in the $500 million to $750 million range for 2026, rising to $750 million to $1,000 million in 2027.
Overall, Moody's assessment ties the affirmed ratings and stable outlook to projected margin recovery, substantial adjusted EBITDA growth in 2026 from prior pricing actions, a gradual benefit from lower cocoa market prices due to hedging timing, and improving free cash flow and leverage metrics over the next two years.