Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.

Can Hain Celestial Group Maintain Its Organic Firepower?

The Hain Celestial Group  (NASDAQ: HAIN  )  reports fresh quarterly results on Wednesday morning, and it's easy to be scared. Whole Foods Market reported uninspiring quarterly results late last month, and if the leading organic supermarket chain isn't faring well, it's not much of a stretch to expect one of its key suppliers to also disappoint the market. 

Not so fast. Hain Celestial's growth over the years has come partly on shrewd acquisitions, but also on the growing number of outlets for natural and organic foodstuffs. It's not just Whole Foods Market these days. Many of the factors weighing on Whole Foods Market -- discounting of organics at the world's largest retailer and more grocers devoting additional shelf space to organics -- actually benefit Hain Celestial. 

We saw this play out three months ago in Hain Celestial's previous quarterly outing. Shortly after Whole Foods Market posted financial results that fell short of expectations, leading to yet another guidance revision lower at the former market darling, Hain Celestial chimed in with blowout results. 

Net sales and operating profits rose 22% and 25%, respectively, with the company's adjusted profit of $0.88 a share clocking in well ahead of the $0.86 a share analysts were targeting. Whole Foods Market, on the other hand, checked in with just 10% in top-line growth. Hain Celestial made a solid report even better by boosting its top- and bottom-line guidance, calling for a 24% gain in sales that implies accelerating growth during the balance of 2014.

Whole Foods Market went on to repeat that 10% top-line growth in its latest quarter. Wall Street sees Hain Celestial's net sales climbing 25% to $578.3 million. Analysts also see earnings per share climbing 37% to $0.89. That's ambitious, but Hain Celestial has beaten Wall Street profit forecasts in three of the past four quarters. 

It's not the only reason to head into Hain Celestial's upcoming report with some degree of confidence. Jim Cramer -- on CNBC's Mad Money last week -- named Hain Celestial as a logical buyout candidate. He sees General Mills or Kellogg as possibly benefiting from snapping it up in an era of consolidation to offset slowing growth.

"I can see either buying Hain," Cramer says. "An acquisition would give either company instant credibility in the natural and organic sections of the supermarket, the only real growth aisles out there."

Cramer's merely thinking out loud. Hain Celestial is unlikely to offer itself up as a buyout candidate unless a generous buyout premium is attached. However, investors buying into Cramer's logic will find solace in his argument if Hain Celestial disappoints investors on Wednesday morning, prompting the market to wonder if it would entertain buyout offers. 

Hain Celestial's stock is actually trading slightly lower in 2014 going into Wednesday morning's report, but the shares did pop 67% higher in 2013. A strong report could result in the stock turning positive year to date, but a bad report could trigger speculation of Hain Celestial as a logical buyout target again. 

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3074755, ~/Articles/ArticleHandler.aspx, 3/31/2015 6:15:25 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!