A leader in natural food and personal care products categories
with an extensive portfolio of well-known brands and strong
The Hain Celestial Group Inc.
) offers a healthy investment opportunity for investors, even in a
volatile market. The stock is poised to surge as the economy
gradually revives and the appetite for organic foods gets
An Attractive Investment Prospect
Hain Celestial remains a healthy option for the investors. Its
shares have been portraying an upward trend, inching closer to its
52-week high of $73.72, and giving a year-to-date return of 96.8%
considering the last traded price of $71.55 on September 10.
Moreover, the company's last traded price was above the 50 and
200-day moving averages, which stand at $60.14 and $52.00,
respectively. In fact, the stock has been consistently trading
above its 200-day moving average since October 18, 2011. It has
also remained above the 50-day moving average since August 17,
Since posting solid fourth-quarter 2012 results that included
year-over-year earnings per share growth of 30.6% and a positive
surprise of 4.4%, the share price has jumped roughly 25.7%.In view
of the earnings surprise trend over the last seven quarters, Hain
Celestial has topped estimates by an average of 5.6%.
Hain Celestial posted better-than-expected fourth quarter
results on August 22, thanks to a rise in consumption, innovative
marketing and expanded distribution. The quarterly earnings of 47
cents per share surpassed the Zacks Consensus Estimate by a couple
of cents, and surged from last year's 36 cents.
Total revenue increased 22.3% year over year to $350.8 million.
However, including sales of the United Kingdom private-label
chilled ready meals operations (discontinued business), revenue
came in at $373.8 million, up 28%. Operating profit grew 26.6% to
$36.2 million, whereas operating margin expanded 36 basis points to
The company expects to sustain strong momentum as it remains
well positioned to capitalize on the growing global demand for
organic products through acquisitions. Management now expects sales
to be in the range of $1.600 billion to $1.615 billion and earnings
between $2.10 and $2.20 per share for fiscal 2013.
Acquisitions Driving Growth
Acquisitions have played a key part in Hain Celestial's strategy
of building market share. These acquisitions have not only widened
the company's geographical presence, but have also provided
opportunities to cross-sell products in the U.S., Canadian, and
Adding to the series, the company announced the acquisition of
leading packaged grocery brands from Premier Foods plc, including
Hartley's, Gale's, Robertson's, Frank Cooper's and Sun-Pat. The 200
million pounds ($316 million) cash and stock deal is expected to
close by the end of October.
Earlier, Hain Celestial had completed the acquisition of
U.K.-based marketer and manufacturer of fresh and frozen foods,
Daniels Group ("Daniels"). The company also acquired Cully &
Sully Limited in Ireland. The acquisition provides a gateway to a
sturdy food and grocery market that is swiftly gaining ground.
The acquisition is expected to be accretive to its earnings upon
completion. Moreover, it is expected to bring in incremental sales
as it provides a strong foothold to the company in the packaged
food and grocery market.
Going forward, we believe that the company will be able to
mitigate the cost pressures through increased productivity and
efficient pricing. Moreover, Hain Celestial has undertaken a number
of initiatives to improve its performance and has put itself on the
The company's Stock Keeping Unit ("SKU") rationalization program
has helped eliminate SKUs, which had lower sales volume or weak
margins. Hain Celestial, which competes with
General Mills Inc.
Kraft Foods Inc.
), holds a Zacks #1 Rank that translates into a short-term Strong
However, the company's customers remain sensitive to
macroeconomic factors including interest rate hikes, increase in
fuel and energy costs, credit availability, unemployment levels,
and high household debt levels, which may negatively impact their
disposable income, triggering a shift in focus from higher priced
organic products to cheaper private label brands. This may
adversely affect Hain's top-line performance. Currently, we
maintain our Neutral recommendation on the stock.
GENL MILLS (GIS): Free Stock Analysis Report
HAIN CELESTIAL (HAIN): Free Stock Analysis
KRAFT FOODS INC (KFT): Free Stock Analysis
To read this article on Zacks.com click here.