KFT Mondelez International, Inc. (MM)

The Hain Celestial Group Inc. (HAIN) reported its fourth-quarter 2012 earnings on August 22, 2012. The Wall Street analysts deliberated over the earnings results for almost a week and eventually made their estimate revisions. Below, we will cover the results of the recent earnings announcement, subsequent estimate revisions by analysts as well as the Zacks Rank and long-term recommendation for the stock.

Earnings Report Review

Hain posted robust fourth-quarter 2012 results. The company reported adjusted earnings of 47 cents a share, which surpassed the Zacks Consensus Estimate by couple of cents and jumped 30.6% from 36 cents earned in the prior-year quarter. Including one-time items, earnings came in at 50 cents compared with 28 cents a share earned in the year-ago quarter.

Revenue for the quarter rose 22.3% year over year to $350.7 million, reflecting a rise in demand for natural organic products. The company noted that consumption in the U.S. grew 14%. Including sales of the United Kingdom private label chilled ready meals operations (discontinued business), revenue came in at $373.8 million, up 28% year over year. The Zacks Consensus Estimate was $366 million for the quarter.

(Read our full coverage on this earnings report: Hain Delivers Strong 4Q)

Earnings Estimate Revisions- Overview

Since the earnings release, estimates for Hain displayed an uptrend, indicating that the analysts remain optimistic on the company’s growth potential in the upcoming quarters.   

Agreement of Estimate Revisions

Clearly, a positive sentiment is evident among analysts, as in the last seven days, 9 out of 12 estimates have been revised upwards, while none were decreased for the for fiscal 2013. Moreover, for fiscal 2014, 4 estimates out of 12 were revised upwards.

For the first and second quarter of fiscal 2013, 4 revisions (out of 12 estimates) have been made in the upward direction, while one was lowered.  

Analysts expect the company to sustain its strong momentum across entire business segments as it remains well positioned to capitalize on the growing global demand for organic products.

Moreover, the company’s strategy of building market share through acquisitions have paid off well, as these have not only widened the company’s geographical presence, but also provided opportunities to cross-sell products in the U.S., Canadian, and European markets.

Magnitude of Estimate Revisions

Given the large number of estimate revisions in the upward direction, the Zacks Consensus Estimate for fiscal 2013 escalated 17 cents to $2.27, while it jumped 23 cents to $2.62 a share in the last 7 days.

Quarterly trends were no different for the company, as the Zacks Consensus Estimate increased by couple of cents to 42 cents for the first-quarter and by 3 cents to 64 cents for the second-quarter of 2013. 

Our View

Going forward, we believe that the company will be benefiting from the rise in the demand for organic products. Moreover, Hain will be able to mitigate the cost pressures through increased productivity and efficient pricing.

Currently, we have a long-term ‘Neutral’ rating on the stock. Hain Celestial, which competes with General Mills Inc. (GIS) and Kraft Foods Inc. (KFT), holds a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating.

About Earnings Estimate Scorecard

As a PhD from MIT, Len Zacks proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at: http://www.zacks.com/education/

 
GENL MILLS (GIS): Free Stock Analysis Report
 
HAIN CELESTIAL (HAIN): Free Stock Analysis Report
 
KRAFT FOODS INC (KFT): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research