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Hain Celestial Strong on Robust Initiatives: Time to Cash In?
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The Hain Celestial Group, Inc. (HAIN - Free Report) appears to be a solid investment choice now, thanks to its sturdy transformation endeavors. Moreover, strength in Project Terra and Stock Keeping Unit (“SKU”) rationalization bodes well.
The natural and organic foods company has seen its shares spike as much as 46% in a year, rallying ahead of its industry’s 20.7% decline and the broader S&P 500’s 5.2% rise. A VGM Score of B further speaks of the inherent strength of this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s Dive Deep
Hain Celestial’s transformation strategy is aimed at simplifying portfolio, identifying additional areas of productivity savings, enhancing margins, reviving top-line growth and improving cash flow. Meanwhile, it is on track to simplify its business in a bid to focus on areas with higher growth potential. Since the onset of the transformation strategy, the company has divested loss-making brands of almost $750 million in fiscal 2019.
We expect such efforts to help the company continue delivering robust margin performance. In the third quarter of fiscal 2020, adjusted gross margin expanded 282 basis points (bps) to 24.3%, thanks to productivity efforts that resulted in lower supply-chain expenses. While adjusted operating margin rose 120 bps to 5.8%, adjusted EBITDA margin expanded 199 bps to 11%.
Additionally, Hain Celestial is on track with Project Terra, which is aimed at cutting costs and complexity alongside identifying cost savings. It expects to generate total cost savings worth $350 million through fiscal 2020 and remove complexity from business. To achieve these savings, the company intends to optimize plants, co-packers and procurement along with rationalizing product portfolio. Meanwhile, the SKU rationalization has helped eliminate SKUs based on lower sales volume or weak margins and identified 700 SKUs, which are already phased out of portfolio.
Quarterly Performance
Driven by the aforesaid factors, Hain Celestial put up a solid third-quarter fiscal 2020 performance, followed by a raised view for the fiscal year. Both the top and the bottom line beat the Zacks Consensus Estimate and improved year over year. With this, the company delivered the third straight earnings beat and second consecutive positive sales surprise. Solid quarterly performance coupled with a smooth transformation plan and increased food-at-home consumption owing to coronavirus led management to raise the outlook.
For fiscal 2020, Hain Celestial expects adjusted EBITDA growth of 15-21% to $190-$200 million compared with the earlier projection of 7-16% growth to $177-$192 million. Additionally, the company now envisions adjusted earnings per share of 75-82 cents, which suggests growth of 25-37% from fiscal 2019. Previously, management projected earnings per share of 62-72 cents, which suggested growth of 3-20%. The Zacks Consensus Estimate for the fiscal-year earnings currently stands at 79 cents.
Don’t Miss These Solid Bets Too
SunOpta (STKL - Free Report) has a trailing four-quarter positive earnings surprise of 43.1% and a Zacks Rank #1.
MGP Ingredients (MGPI - Free Report) has a trailing four-quarter positive earnings surprise of 10.4% and a Zacks Rank #1.
Celsius Holdings (CELH - Free Report) , also a Zacks Rank #1 stock, has a positive earnings surprise of 200% for the last reported quarter.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
Hain Celestial Strong on Robust Initiatives: Time to Cash In?
The Hain Celestial Group, Inc. (HAIN - Free Report) appears to be a solid investment choice now, thanks to its sturdy transformation endeavors. Moreover, strength in Project Terra and Stock Keeping Unit (“SKU”) rationalization bodes well.
The natural and organic foods company has seen its shares spike as much as 46% in a year, rallying ahead of its industry’s 20.7% decline and the broader S&P 500’s 5.2% rise. A VGM Score of B further speaks of the inherent strength of this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s Dive Deep
Hain Celestial’s transformation strategy is aimed at simplifying portfolio, identifying additional areas of productivity savings, enhancing margins, reviving top-line growth and improving cash flow. Meanwhile, it is on track to simplify its business in a bid to focus on areas with higher growth potential. Since the onset of the transformation strategy, the company has divested loss-making brands of almost $750 million in fiscal 2019.
We expect such efforts to help the company continue delivering robust margin performance. In the third quarter of fiscal 2020, adjusted gross margin expanded 282 basis points (bps) to 24.3%, thanks to productivity efforts that resulted in lower supply-chain expenses. While adjusted operating margin rose 120 bps to 5.8%, adjusted EBITDA margin expanded 199 bps to 11%.
Additionally, Hain Celestial is on track with Project Terra, which is aimed at cutting costs and complexity alongside identifying cost savings. It expects to generate total cost savings worth $350 million through fiscal 2020 and remove complexity from business. To achieve these savings, the company intends to optimize plants, co-packers and procurement along with rationalizing product portfolio. Meanwhile, the SKU rationalization has helped eliminate SKUs based on lower sales volume or weak margins and identified 700 SKUs, which are already phased out of portfolio.
Quarterly Performance
Driven by the aforesaid factors, Hain Celestial put up a solid third-quarter fiscal 2020 performance, followed by a raised view for the fiscal year. Both the top and the bottom line beat the Zacks Consensus Estimate and improved year over year. With this, the company delivered the third straight earnings beat and second consecutive positive sales surprise. Solid quarterly performance coupled with a smooth transformation plan and increased food-at-home consumption owing to coronavirus led management to raise the outlook.
For fiscal 2020, Hain Celestial expects adjusted EBITDA growth of 15-21% to $190-$200 million compared with the earlier projection of 7-16% growth to $177-$192 million. Additionally, the company now envisions adjusted earnings per share of 75-82 cents, which suggests growth of 25-37% from fiscal 2019. Previously, management projected earnings per share of 62-72 cents, which suggested growth of 3-20%. The Zacks Consensus Estimate for the fiscal-year earnings currently stands at 79 cents.
Don’t Miss These Solid Bets Too
SunOpta (STKL - Free Report) has a trailing four-quarter positive earnings surprise of 43.1% and a Zacks Rank #1.
MGP Ingredients (MGPI - Free Report) has a trailing four-quarter positive earnings surprise of 10.4% and a Zacks Rank #1.
Celsius Holdings (CELH - Free Report) , also a Zacks Rank #1 stock, has a positive earnings surprise of 200% for the last reported quarter.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>