On heels of strong 1Q, Hershey’s second-quarter expected to test Wall Street’s expectations

Earnings Preview: Hershey’s 2Q

HARRISBURG, Pa. — The Hershey Co., the nation’s second-largest candy maker, reports its second-quarter earnings before the stock market opens Thursday.

WHAT TO WATCH FOR: Signs that Hershey’s blueprint for success is continuing to work for a ninth straight quarter while it works to get leaner, pump more money into advertising and promotions and expand overseas without a major merger.

Hershey’s first quarter was a huge success. It almost doubled its profit and boosted its 2010 adjusted earnings and sales growth targets above Wall Street’s expectations.

It also announced plans to lay off hundreds of union workers in its hometown, shut down production at its inefficient flagship plant at 19 E. Chocolate Ave., and pour up to $300 million into modernization at several Hershey facilities.

As a result, it hopes to cut costs as part of a plan that is intended to save $80 million a year.

Edward Jones analyst Jack Russo says data he has reviewed looks positive, including evidence that Hershey is picking up market share and that new products are doing well. Janney Capital Markets analyst Jonathan Feeney said growth should slow from the first quarter, but Hershey has a solid opportunity to beat Wall Street expectations in this quarter.

WHY IT MATTERS: Hershey has to prove to Wall Street that it can be successful while major competitors grow through acquisition and gain more marketing muscle.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect Hershey to report earnings of 46 cents per share, excluding one-time items, in the quarter on $1.235 billion in revenue.

LAST YEAR’S QUARTER: Hershey reported profit of 43 cents per share a year earlier, excluding one-time items, on revenue of $1.17 billion.