Hain Celestial Still Holds Promise - Analyst Blog

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A leader in natural food and personal care product categories with an extensive portfolio of well-known brands and strong fundamentals, The Hain Celestial Group, Inc. HAIN is poised to surge as the economy gradually revives and the appetite for organic food increases. Over the past one year the stock has surged 58% and still looks promising.

Hain Celestial's strategic investments coupled with continued efforts to contain costs, increase productivity, and enhance cash flows and margins enabled it to deliver healthy results. The company, which competes with General Mills Inc. GIS, expects to sustain strong momentum as it remains well positioned to capitalize on the growing global demand for organic products through acquisitions, which has been a key strategy in building market share.

Hain Celestial constantly endeavors strategic opportunities to expand its footprint in organic and natural products and in turn, "Change the Way the World Eats". Its latest attempt is the acquisition of Tilda Limited, a renowned name in Basmati rice.

Earlier, the company had acquired leading packaged grocery brands Hartley's, Gale's, Robertson's, Frank Cooper's and Sun-Pat from Premier Foods plc. The company also acquired Ella's Kitchen Group Limited that offers organic baby food products under approximately 80 brands and provides them in easy to carry pouches.

If we look at the last concluded quarterly numbers, we observe that the company's net sales and earnings per share increased 17.5% and 17.6%, respectively. Rise in consumption, innovative marketing and expanded distribution facilitated the growth.

However, what makes us slightly cautious on the stock is that both the top and the bottom line fell short of the Zacks expectations in the second quarter of fiscal 2014, after posting earnings beat in 11 of the past 12 quarters and in-line results in the remaining quarter. Moreover, we remained concerned about the gross margin that was hit hard by higher commodity costs.

Despite lower-than-expected results, Hain Celestial remained upbeat about its performance, given the recent acquisition of Tilda. Management now anticipates sales increase in the band of 22% to 24% and earnings per share growth of 21% to 25%.

Hain Celestial currently holds a Zacks Rank #3 (Hold).

Other Stocks that Warrant a Look

Other better-ranked stocks worth considering include, J&J Snack Foods Corp. JJSF and Diamond Foods, Inc. DMND, both carrying a Zacks Rank #2 (Buy).



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DIAMOND FOODS DMND: Free Stock Analysis Report

GENL MILLS GIS: Free Stock Analysis Report

HAIN CELESTIAL HAIN: Free Stock Analysis Report

J&J SNACK FOODS JJSF: Free Stock Analysis Report

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