We maintained our Outperform recommendation on The Hain Celestial Group Inc. (HAIN - Analyst Report) with a target price of $107.00. The stock currently holds a Zacks Rank #2 (Buy).
Why the Reiteration?
A leader in natural food and personal care product categories with an extensive portfolio of well-known brands and strong fundamentals, Hain Celestial offers a healthy investment opportunity for investors. The stock is poised to surge as the economy gradually revives and the appetite for organic food increases.
A solid return of roughly 83% in the past one year, strong operating performance and rising Zacks Consensus Estimates are the major catalysts behind our bullish attitude toward Hain Celestial.
Hain Celestial’s strategic investments plus continued efforts to contain costs, increase productivity, and enhance cash flows and margins enabled it to deliver healthy results. The company, which competes with General Mills Inc. (GIS - Analyst Report) , 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 constantly endeavors strategic opportunities to expand its footprint in organic and natural products and in turn, "Change the Way the World Eats". Its latest attempt is the acquisition of Tilda Limited, a renowned name in Basmati rice. Management believes that the buyout of Tilda will augment the company's adjusted earnings by 6 cents to 10 cents a share during the second half of fiscal-year 2014.
Earlier, the company had acquired leading packaged grocery brands Hartley's, Gale's Robertson's, Frank Cooper's and Sun-Pat from Premier Foods plc. The company also acquired Ella's Kitchen Group Limited that offers organic baby food products under approximately 80 brands and provides them in easy to carry pouches.
If we look at the company’s earnings surprise history over the last 13 quarters, Hain Celestial has topped estimates by an average of 4.1%. In the last concluded quarter, the company posted earnings of 52 cents a share that came a penny ahead of the Zacks Consensus Estimate and surged 26.8% year over year. Management cited that strong top-line growth of 32.7%, integration of acquired businesses and focus on high margin carrying brands facilitated bottom-line growth.
Management anticipates sales in the range of $2,025 million to $2,050 million in fiscal 2014, reflecting a year-over-year increase of 17%. Earnings are projected in the range of $2.95 to $3.05 per share, up 16% to 20% year over year. The current Zacks Consensus Estimate for fiscal 2014 is $3.08.
Other Stocks that Warrant a Look
Other better-ranked stocks worth considering include, Green Mountain Coffee Roasters, Inc. and Kraft Food Group, Inc. , both carrying a Zacks Rank #2 (Buy).