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The Hain Celestial Group Inc. (HAIN - Analyst Report), a leader in natural food and personal care products, is slated to report its first-quarter 2013 financial results on Thursday, November 1, 2012.

The current Zacks Consensus Estimate for the quarter is 40 cents a share that reflects a growth of 37.9% from the prior-year quarter’s earnings. The estimates in the current Zacks Consensus range between a low of 35 cents and a high of 44 cents a share. The Zacks Consensus revenue estimate is pegged at $371 million for the quarter under discussion.

Recap of Fourth-Quarter 2012

Hain Celestial posted better-than-expected fourth quarter results on August 22, attributable 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 30.6% from last year’s 36 cents.

Total revenue bolstered 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%.

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.

Zacks Agreement & Magnitude

The Zacks Consensus Estimate for the first quarter of 2013 hasn’t shown any movement in the last 7 days, as none of the analysts revisited their estimates. However, in the last 30 days, the Zacks Consensus Estimate dropped by a penny as 4 out of 15 analysts covering the stock lowered their estimates.

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 5.5%, suggesting that Hain Celestial has outperformed the Zacks Consensus Estimate by the same magnitude in the trailing four quarters.

Closing Comment

Hain Celestial 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 bigger. 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 European markets. The company recently acquired Premier Foods plc's portfolio of brands that includes Hartley's, Sun–Pat, Gale's, Robertson's, and Frank Cooper's.

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 growth trajectory. The company’s Stock Keeping Unit (“SKU”) rationalization program has helped eliminate SKUs, which had lower sales volume or weak margins.

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. Moreover, Hain Celestial, which competes with General Mills Inc. (GIS - Analyst Report), holds a Zacks #3 Rank that translates into a short-term “Hold” rating.

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