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Hain Celestial Gaining, North America Unit a Key Catalyst

Zacks Equity Research
·4 mins read

The Hain Celestial Group, Inc. HAIN is on a rising trajectory, backed by the company’s solid North America segment as well as well-chalked strategic endeavors to boost efficiency. The company is also progressing well with its transformation plans. Markedly, these upsides were well reflected in the company’s fourth-quarter fiscal 2020 results, with the top and the bottom line improving year on year.

We note that this Zacks Rank #2 (Strong Buy) company’s shares have gained 43.7% in the past six months compared with the industry’s 11.2% rise. That said, let’s take a closer look at the winning sides of this food and personal care products’ company.

North America Segment is Doing Well

Hain Celestial’s top-line growth in the fourth quarter was mainly backed by higher sales in the North America segment. During the fourth quarter, net sales in this division increased 5% year over year, driven by growth in the Get Bigger brands. In fact, Get Bigger brands represented more than two-thirds of the revenue generated in the region. For fiscal 2020, the Get Bigger brands portfolio improved 6.4%.

Going ahead, management expects continued growth in Get Bigger brands, and expects the same to keep driving North America segment performance. In fact, the Get Bigger brands are expected to grow double digits in the first half of fiscal 2021.

Transformation Plans & Other Strategic Efforts

Hain Celestial is progressing well with its transformation strategies to deliver sustainable profits. The transformation strategies are aimed at simplifying portfolio, identifying additional areas of productivity savings, enhancing margins and improving cash flow. Moreover, well-chalked innovations, marketing and assortment optimization efforts have been supporting the company’s top line. It is also on track with boosting automation capabilities in plants for lowering costs.

In terms of simplifying portfolio, by exiting smaller and non-strategic brands, the company is able to reduce supply-chain complexity and redeploy resources on bigger growth opportunities. Accordingly, the company has divested brands such as Danival, Rudi's Gluten Free Bakery TM, Rudi's Organic Bakery brands, BluePrint and Fountain of Truth among others. Moreover, Hain Celestial’s SKU rationalization program has been progressing well and has helped eliminate SKUs based on lower sales volume or weak margins.

We note that acquisitions have played a key role in enhancing Hain Celestial’s market share. Notable mentions in this regard are Clarks UK Ltd., Hartley's, Gale's Robertson's, Frank Cooper's, Sun-Pat and Ella's Kitchen Group Limited.

Wrapping Up

We believe that the aforementioned strategic efforts will reap benefits for the company. Moreover, we expect the company’s North American unit to remain yielding. These upsides are likely to keep garnering investor’s attention.

Looking for Solid Food Stocks? Check These

Medifast MED, which currently sports a Zacks Rank #1 (Strong Buy), has an impressive earnings surprise record. You can see the complete list of today’s Zacks #1 Rank stocks here.

TreeHouse Foods THS, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7.7%.

B&G Foods BGS, with a Zacks Rank #2, has a robust earnings surprise record.

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