Hain Celestial (HAIN) Gains From Growth Strategies Amid Risks
The Hain Celestial Group, Inc. HAIN is well poised to benefit from its focus on global strategic goals and continues to make marketing investments in key brands. Recently, the company revealed its Reimagined strategy to boost sustainable growth in the long term. It looks forward to materially simplifying its footprint with a direct presence across five major markets, comprising the United States, Canada, the U.K., Ireland and Europe.
HAIN has been experiencing solid momentum in its International Segment of late. For instance, in the first quarter of fiscal 2024, the segment’s net sales increased 9.3% to $165 million. This growth was driven by strength in its meal preparation and beverages businesses. Solid demand for several categories, including soup, grocery, non-dairy beverages and baby & kids, has been boosting the segment’s performance.
Hain Celestial plans to elevate its approach toward brand building and expand its reach across under-penetrated, margin-accretive channels like omnichannel e-commerce. It also remains focused on simplifying its portfolio, identifying additional areas of productivity savings, enhancing margins, reviving top-line growth and improving cash flow.
For fiscal 2024, HAIN projects balanced growth across the portfolio, along with the North America and International segments registering low-single digit organic net sales growth. It anticipates overall adjusted net sales to increase by 2-4% year over year. It expects adjusted EBITDA in the $155-$165 million range during the same time frame.
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The company carries a Zacks Rank #3 (Hold) at present. Its shares have risen 10.9% in the past three months against the industry’s 2.2% decline.
Despite the positives, the company has been witnessing weakness across its North America segment. In the fiscal first quarter, net sales from the North America segment declined 9.8% to $260.1 million. The decline was attributable to lower sales in the baby & kids business due to industry-wide supply constraints in its organic baby formula business. Softness in personal care owing to the timing shift of a sun care program also hurt its results.
Higher operating costs and expenses have also been a major concern for the company. Its selling, general and administrative expenses grew 2.9% year over year in the fiscal first quarter. The increase was primarily driven by growth in the wage rate and inflation in other support costs. The company’s adjusted EBITDA margin decreased by 250 basis points to 5.7% in the quarter.
Stocks to Consider
Some better-ranked stocks from the same industry are Celsius CELH, The Kraft Heinz Company KHC and Vital Farms Inc. VITL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Celsius specializes in commercializing nutritional foods, beverages and dietary supplements. CELH has a trailing four-quarter earnings surprise of 110.9% on average. The Zacks Consensus Estimate for Celsius’s current financial-year sales and earnings implies growth of 98.5% and 184.1%, respectively, from the year-ago reported numbers.
Kraft Heinz is a food and beverage product company. KHC has a trailing four-quarter earnings surprise of 9.9% on average. The Zacks Consensus Estimate for Kraft Heinz’s current financial-year sales and earnings indicates growth of 1.1% and 6.5%, respectively, from the year-ago reported numbers.
Vital Farms offers a range of pasture-raised foods. VITL has a trailing four-quarter earnings surprise of 145% on average. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.
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The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
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