Earnings Preview: Hain Celestial - Analyst Blog

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The Hain Celestial Group Inc . ( HAIN ), a leader in natural food and personal care products with an extensive portfolio of well-known brands, is slated to report its fourth quarter and fiscal 2012 financial results on Wednesday, August 22, 2012.

The current Zacks Consensus Estimate for the quarter is 45 cents a share that reflects a growth of 28.6% from the prior-year quarter's earnings. The estimates in the current Zacks Consensus range between a low of 43 cents and a high of 48 cents a share. The Zacks Consensus estimates revenue to be at $366 million for the quarter under review.

For fiscal 2012, analysts polled by Zacks are projecting earnings of $1.80 per share and revenue of $1,419 million.

Recap of Third-Quarter 2012

Rise in consumption coupled with expanded distribution facilitated Hain Celestial to post third-quarter 2012 earnings per share of 54 cents that surpassed the Zacks Consensus Estimate of 50 cents. The reported earnings jumped 50% from 36 cents a share delivered in the prior-year quarter.

Rise in demand for natural organic products has proven to be a boon for the company, as revenue in the quarter rose 31.5% year over year to $379.4 million. However, including sales of the United Kingdom private label chilled ready meals operations (discontinued business), revenue came in at $400.3 million, up 39% year over year. The Zacks Consensus Estimate was $405 million for the quarter.

Guidance

At its third quarter earnings call, Hain Celestial raised its fiscal 2012 earnings guidance to a range of $1.76 to $1.80 per share from its previous projection of $1.63 to $1.73. The company also forecasted sales to be in the range of $1.40 billion to $1.41 billion, reflecting adjustment for the discontinued operations of private label chilled ready meals.

Zacks Agreement & Magnitude

No movement was noticed in the Zacks Consensus Estimate for the fourth quarter of 2012, either in the last 7 or 30 days, as none of the 15 analysts covering the stock revised their estimates.

The Zacks Consensus Estimate for fiscal 2012 also remains constant as none of the analysts revisited their estimates in the last 7 days. Moreover, an upward revision in estimate made by one analyst in the last 30 days did not materially impact the current Zacks Consensus Estimate, thereby keeping it stable.

Positive Earnings Surprise History

With respect to earnings surprises, Hain Celestial has topped the Zacks Consensus Estimate over the last four quarters in the range of 3.6% to 8%. The average remained at 5.9%, suggesting that Hain Celestial has outpaced the Zacks Consensus Estimate by the same magnitude in the trailing four quarters. Given the past performance, we expect the company to outperform the Zacks Consensus Estimate in the upcoming quarterly results.

Closing Comment

Hain Celestial offers investors one of the strongest growth profiles in the industry. The stock is poised to surge as the economy gradually revives and the popularity of organic food rises. We believe that the company remains well positioned to capitalize on the growing global demand for organic products. During third-quarter 2012 earnings call, management hinted that consumption in the U.S. increased 9%, which is quite impressive in this scenario.

Acquisitions have played a major role in the company's strategy to build market share. Not only did buyouts expand Hain Celestial's geographic reach, but also brought in opportunities to cross-sell its products in the U.S., Canadian and European markets. Notably, a healthy balance sheet enables the company to target strategic acquisition opportunities.

Additionally, the company announced the acquisition of Cully & Sully Limited in Ireland. The acquisition is expected to amplify the sales of the company as it provides a gateway to a sturdy food and grocery market that is swiftly gaining ground.

We currently have a long-term "Outperform" recommendation on the stock. However, Hain Celestial, which competes with General Mills Inc. ( GIS ) and Kraft Foods Inc. ( KFT ), holds a Zacks #3 Rank that translates into a short-term "Hold" rating.


 
GENL MILLS (GIS): Free Stock Analysis Report
 
HAIN CELESTIAL (HAIN): Free Stock Analysis Report
 
KRAFT FOODS INC (KFT): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: GIS , HAIN , KFT

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