Earnings Preview: Hain Celestial - Analyst Blog
August 21 2012 - 5:30AM
Zacks
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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