Being a leader in natural food and personal care products categories with an extensive portfolio of well-known brands, The Hain Celestial Group Inc. (HAIN) offers investors one of the strongest growth profiles in the industry. The stock is poised to rise as the economy gradually revives and appetites for organic foods get bigger.
Having said that, Hain Celestial remains a healthy option for investors. Shares of the company have portrayed a strong upward trend over the past year, giving a return of 34% considering the last traded price of $36.35 on January 3, inching closer to its 52-week high of $38.47.
Supporting the view is the current valuation of the company. On a P/E basis, Hain Celestial’s shares trade at 21.4x, a 51% discount to the 43.9x for the industry average. On a price-to-book basis, the shares trade at 1.8x, which is again at a 45% discount to the industry average of 3.3x.
Moreover, considering the past performance of the company, Hain Celestial has consistently beaten the Zacks Consensus Estimate over the last four quarters in the range of 3.6% to 6.1%. The average remains at 5.2%. This suggests that Hain Celestial has topped the Zacks Consensus Estimate by an average of 5.2% in the trailing four quarters.
We believe that the company remains well positioned to capitalize on the growing global demand for organic products. The U.S. alone has shown an approximately 20% jump in its consumption of organic foods.
Acquisitions have been a key part of the company’s strategy to build market share. Not only have these expanded Hain Celestial’s geographic reach, these have also brought in opportunities to cross-sell its products in the U.S., Canadian, and European markets. Notably, a healthy balance sheet enables the company to target strategic acquisition opportunities.
Following its growth plan, Hain Celestial recently announced the acquisition of Daniels Group, the U.K. based marketer and manufacturer of fresh and frozen foods. The acquisition offers Hain Celestial a gateway to a sturdy food and grocery market that is swiftly gaining ground. Currently, the frozen category represents more than 50% of food sales in U.K.
Further, the company’s strategic initiatives to enhance its portfolio of global brands by acquiring Danival, the manufacturer of certified organic food products with facilities in France, and GG UniqueFiber, the manufacturer of all natural high fiber crackers in Norway, is paying off.
The company’s strong fundamentals and favorable outlook are compelling. We thus, maintain our bullish stance on the stock even in a volatile market. We currently, have a long-term Outperform rating on the stock. However, Hain Celestial, which competes with General Mills Inc. (GIS) and Kraft Foods Inc. (KFT), holds a Zacks #2 Rank that translates into a short-term Buy recommendation.
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