Shares of candy and snack company Hershey (HSY 4.01%) went up on Thursday after the company reported financial results for the fourth quarter of 2024. As of 2:30 p.m. ET, Hershey stock was up about 5%.

A good end to a challenging year

In Q4, Hershey outperformed expectations on both the top and the bottom line. It generated nearly $2.9 billion in net sales, which was up almost 9% year over year. And it had net income of nearly $800 million, which more than doubled from the same quarter of 2023.

Hershey stock might have been up by a greater amount today if that jump in net income didn't come with an asterisk. Cocoa is one of the company's main input prices, and prices have skyrocketed in recent years. Hershey protects itself with contracts. These contracts delivered hundreds of millions of dollars in investment gains, and this is the bulk of its stunning Q4 profit.

It's a good thing, to be sure. But it's not profit from Hershey's core operations, which is why the market reaction is somewhat muted relative to its huge net-income jump.

Unfortunately, there's still a challenging year ahead

There were clear headwinds for Hershey in 2024, and these will persist in 2025 based on management's guidance. The company's net sales were only up 0.3% in 2024, and net sales are only expected to increase by 2% in 2025.

Moreover, its earnings per share (EPS) are expected to take a big hit. Adjusting for things such as its cocoa contracts, it had EPS of $9.37 during this past year. But this coming year it expects EPS of just $6.00 to $6.18.

The candy and snack industry just doesn't offer much growth right now, and Hershey is already a large player, making market share gains difficult. And with commodity prices high, profits are under pressure. The saving grace here is that Hershey stock already trades at about its cheapest valuation in six years, reflecting the headwinds. But investors will want to see better growth at some point if this stock is going to bounce back.