The Hain Celestial Group
reports fresh quarterly results on Wednesday morning, and it's
easy to be scared.
Whole Foods Market
reported uninspiring quarterly results late last month, and if
the leading organic supermarket chain isn't faring well, it's not
much of a stretch to expect one of its key suppliers to also
disappoint the market.
Not so fast. Hain Celestial's growth over the years has come
partly on shrewd acquisitions, but also on the growing number of
outlets for natural and organic foodstuffs. It's not just Whole
Foods Market these days. Many of the factors weighing on Whole
Foods Market --
discounting of organics
at the world's largest retailer and more grocers devoting
additional shelf space to organics -- actually benefit Hain
We saw this play out three months ago in Hain Celestial's
previous quarterly outing. Shortly after Whole Foods Market
posted financial results that fell short of expectations, leading
to yet another guidance revision lower at the former market
darling, Hain Celestial chimed in with blowout results.
Net sales and operating profits rose 22% and 25%,
respectively, with the company's adjusted profit of $0.88 a share
clocking in well ahead of the $0.86 a share analysts were
targeting. Whole Foods Market, on the other hand, checked in with
just 10% in top-line growth. Hain Celestial made a solid report
even better by boosting its top- and bottom-line guidance,
calling for a 24% gain in sales that implies accelerating growth
during the balance of 2014.
Whole Foods Market went on to repeat that 10% top-line growth
in its latest quarter. Wall Street sees Hain Celestial's net
sales climbing 25% to $578.3 million. Analysts also see earnings
per share climbing 37% to $0.89. That's ambitious, but Hain
Celestial has beaten Wall Street profit forecasts in three of the
past four quarters.
It's not the only reason to head into Hain Celestial's
upcoming report with some degree of confidence. Jim Cramer -- on
last week -- named Hain Celestial as a
. He sees
as possibly benefiting from snapping it up in an era of
consolidation to offset slowing growth.
"I can see either buying Hain," Cramer says. "An acquisition
would give either company instant credibility in the natural and
organic sections of the supermarket, the only real growth aisles
Cramer's merely thinking out loud. Hain Celestial is unlikely
to offer itself up as a buyout candidate unless a generous buyout
premium is attached. However, investors buying into Cramer's
logic will find solace in his argument if Hain Celestial
disappoints investors on Wednesday morning, prompting the market
to wonder if it would entertain buyout offers.
Hain Celestial's stock is actually trading slightly lower in
2014 going into Wednesday morning's report, but the shares did
pop 67% higher in 2013. A strong report could result in the stock
turning positive year to date, but a bad report could trigger
speculation of Hain Celestial as a logical buyout target
for the next decade
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Can Hain Celestial Group Maintain Its Organic
originally appeared on Fool.com.
John Mackey, co-CEO of Whole Foods Market, is a member of The
Motley Fool's board of directors.
has no position in any stocks mentioned. The Motley Fool
recommends and owns shares of Hain Celestial and Whole Foods
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