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A solid year-to-date return of 72.8%, strong fourth-quarter 2012 results and rising estimates aided The Hain Celestial Group, Inc. (HAIN - Analyst Report) to attain a Zacks #1 Rank (Strong Buy) on August 25, 2012. This natural food and personal care products provider has outperformed the Zacks Consensus Estimates in 7 straight quarters, averaging about 5.6%.

The Rank Drivers

Hain Celestial offers investors one of the strongest growth profiles in the industry. The company’s strategic investments plus continued efforts to contain costs, increase productivity, and enhance cash flows and margins, have enabled it to deliver healthy results. This is quite evident from Hain’s fourth-quarter 2012 results.

The company 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 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 of 45 cents by 4.4%, and year-ago earnings of 36 cents by 30.6%.

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 10.3%.

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.

Decent Earnings Estimate Revisions

The Zacks Consensus Estimate for fiscal 2013 rose 12.9% to $2.37 in the last 60 days, while for fiscal 2014 it advanced 17.6% to $2.81. The fiscal 2013 estimate is far above the upper end of the guidance range, and implies year-over-year growth of 8.5%. The fiscal 2014 estimate suggests a yearly increase of 18.6%.

Valuation Reflects Fundamental Strength

Hain Celestial currently trades at a forward P/E of 26.55x, reflecting a 40.1% premium to the peer group average of 18.95x. Also, its price-to-book ratio of 2.91 is at a substantial premium to the peer group average of 2.09.Given the company’s compelling fundamentals, the premium valuation is justified and well supported by its long-term estimated EPS growth rate of 15% versus 12.7% for the peer group.

With respect to return on assets (ROA), the stock looks attractive. It has a 12-month ROA of 5.2%, which is above its peer group average of 4.8%. This implies that the company is utilizing its assets more efficiently than its peers.

Overview

Incorporated in 1993 and headquartered in Melville, New York, Hain Celestial produces, distributes, markets, and sells various natural and organic foods as well as personal care products in the United States, Canada and Europe. The company offers popular better-for-you groceries . It also provides natural personal care products under brands such as Avalon Organics, Alba Botanica, JASON, Zia, Queen Helene and TenderCare brands. Hain Celestial, which competes with General Mills, Inc. (GIS - Analyst Report) and Kraft Foods Inc. , currently has a market cap of $2.82 billion.

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