Leading organic and natural products company Hain Celestial (NASDAQ:HAIN) ended fiscal 2014 with flying colors. The company recently posted its results for the fourth quarter, which were fantastic. The company saw great demand for its organic products in the market, which can be seen by increasing sales in each quarter with its leading brands such as Ella's Kitchen, Garden of Eatin, Imagine, The Greek Gods, Sensible Portions, Terra, Westbrae, Spectrum and Alba Botanica in North America, and Gale's, Natumi, Frank Cooper's across various sales channels. Looking at its growth momentum, management of the company is expecting a better fiscal 2015, and it has also posted an upbeat guidance.
Hain Celestial ended fiscal 2014 with good financials. In the recently reported quarter, Hain’s sales rose by a record 26%, leading to a solid increase in the EBITDA by 27% to $300 million. On the back of good sales for its organic and natural products, Hain also saw a good 12.7% increase in the operating income. On the earnings front as well, Hain was impressive with $0.90 per share, which was more than $0.65 per share a year earlier.
- Warning! GuruFocus has detected 3 Warning Signs with HAIN. Click here to check it out.
- HAIN 15-Year Financial Data
- The intrinsic value of HAIN
- Peter Lynch Chart of HAIN
Better performances can be expected
Hain Celestial had a roller coaster ride in fiscal 2014. The company saw good traction for its products under its leading brands, and has posted some impressive numbers on the board. The company thinks that its acquisitions in the past have turned out to be good for it, and Hain is now reaping the benefits.
Hain Celestial made two strategic acquisitions of Tilda and Rudi’s Organic Bakery in the past, which were one of the key contributors in increasing Hain’s sales. The company plans to focus more on this acquisition to drive better results. However, since Hain is expecting demand for its healthy organic products to grow, it is seeing the urgent need of expanding distribution with new and existing customers across multiple channels.
Hain Celestial is counting on its leading brands, which were robust in their performance in the past and delivered double digit increase in the sales. Moreover, Hain might have good opportunities as some of the giants such as Whole Foods Market (NASDAQ:WFM) and Sprouts Farmers Market (NASDAQ:SFM) are expanding to open 1,200 stores. This will create a lot of opportunities for Hain to capture and become more profitable in the future.
Expanding the business
Seeing the growing demand, Hain is expanding its business over national boundaries in regions such as India and the Middle-East. Also for establishing its footprint in Asia, it is working in a joint venture with Hutchinson Whampoa. Besides these moves, Hain is also adding new products in different areas such as nondairy products in Europe, and it is also expanding its U.K. grocery business with Gale's, Sun-Pat and Hartley's. Further, Hain is focusing on customers' health and wellness, and for this, it is continuing to develop and expand its relationship with Tesco and Sainsbury.
Moving forward, Hain is seeing good traction in its grocery business. To support this growing demand, Hain Celestial has some aggressive plans for the new fiscal year. It is going to launch its first new advertising program in the first quarter of fiscal 2015. Also, along with Sainsbury, Hain Celestial has launched 40 new products and is expecting these products to gain traction in the market.
Moreover, Hain Celestial is looking forward to see more growth in sales and integration opportunities from its recent acquisitions. Also, Hain Celestial continues to spend more through its newly created social media team to build more and more awareness around its brands, both domestically and internationally.
With a trailing P/E of 37.08, Hain Celestial is slightly overvalued. But a look at its forward P/E, which is 22.34, indicates that there is much room for earnings growth. Also, for the next five years, it is expected to grow at a CAGR of 14.10%, which is marginally above the industry average. Also, with a good balance sheet and growth momentum, Hain Celestial is a good bet as of now.