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Hain Celestial (HAIN) Robust on Transformation Strategy

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The Hain Celestial Group, Inc. (HAIN - Free Report) is tracking up the charts, thanks to its impressive transformation efforts. The transformation strategy is aimed at simplifying portfolio, identifying additional areas of productivity savings, enhancing margins, reviving top-line growth and improving cash flow. Apparently, shares of this natural and organic food producer have increased 44.1% so far this year, outperforming the industry’s 1.4% gain. A robust first-quarter fiscal 2021 performance has been further aiding the Zacks Rank #2 (Buy) stock. Let’s delve deep.

Strategic Endeavors

Speaking of Hain Celestial’s robust efforts, the company remains focused on its global strategic goals and continues to make marketing investments in key brands. Further, it is progressing well with its transformation strategy to deliver sustainable profits. Management is also on track with boosting automation capabilities in plants for lowering costs, optimizing infrastructure, redesigning engineered products, driving synergies between the United States and Canada, and optimizing pricing.

Furthermore, Hain Celestial is on track to simplify its business in a bid to focus on areas with higher growth potential. In fact, by exiting smaller and non-strategic brands, the company is able to reduce supply-chain complexity and redeploy resources for bigger growth opportunities. The company sold its Danival business in Europe to Wessanen N.V.’s subsidiary. On May 1, 2020, it concluded the sale of the Rudi's Gluten Free Bakery TM and Rudi's Organic Bakery brands to an affiliate of the Promise Gluten Free.

Meanwhile, acquisitions form a key part of the company’s strategy to build market share. It targets strategic acquisition opportunities, which is likely to result in incremental sales along with providing the company a strong foothold in the packaged food and grocery market.

Quarterly Performance

Despite the ongoing impacts of the coronavirus pandemic, Hain Celestial put up a stellar first-quarter fiscal 2021 performance. Both the company’s top and bottom line surpassed the Zacks Consensus Estimate and improved year on year. In fact, earnings delivered the fifth straight quarter of beat. While higher sales and margins have fueled the bottom line, increased sales in the North America and International segments aided the top line. Moreover, adjusted gross margin was impressive, buoyed by gains from supply-chain productivity initiatives and higher product mix from stock-keeping unit rationalization. Also, adjusted EBITDA margin was robust on higher gross margin and lower SG&A.

However, the company’s food service-oriented fruit business continued to be a headwind in fiscal first quarter as several offices and restaurants were shut down or had limited service.

Nonetheless, management expects gross margin and adjusted EBITDA margin to expand for fiscal 2021. Also it expects robust double-digit growth in adjusted EBITDA. For the second quarter of fiscal 2021, management anticipates net sales to grow in mid-single digit, at cc, after excluding divestitures and discontinued brands. Further, it expects gross margin to rise considerably in the quarter and anticipates higher adjusted EBITDA.

More Solid Food Stocks

United Natural Foods (UNFI - Free Report) has delivered a trailing four-quarter average earnings surprise of 4.8% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Blue Apron Holdings (APRN - Free Report) has delivered a trailing four-quarter average earnings surprise of 30.3% and presently has a Zacks Rank #2.

SunOpta (STKL - Free Report) has delivered a trailing four-quarter average earnings surprise of 73.3% and presently has a Zacks Rank #2.

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