When natural and organic packaged foods company Hain Celestial Group Inc (NASDAQ:HAIN) last reported earnings in August, it wrapped up its fiscal year with another strong run of growth. Sales were up 25% and earnings per share were up 16%, both reaching record levels for Hain. 

However, management's guidance for fiscal 2016 seems to have put Mr. Market on edge. Hain shares were up 20% for the year through Aug. 17 -- the day before the company announced earnings for FY2015 and guidance for 2016. Since then, the company's stock price has fallen nearly 30%, leaving it down about 17% year-to-date.

Is the growth story over? Hain is scheduled to report first-quarter financial results on Nov. 5. Let's take a closer look at what to expect. 

A look at guidance 
Hain Celestial management doesn't provide quarterly guidance, but does give full-year estimates for revenue and earnings:

  • $2.97 billion to $3.11 billion in revenue, a 10%-15% increase over FY 2015.
  • Earnings per share of $2.11-$2.26, a 12%-20% increase. 

Note that the earnings guidance doesn't include the potential impact of acquisitions, non-recurring items, or other potential "one-time" charges. This is worth noting because Hain has a long history of being very acquisitive.

Impact of investments and acquisitions on earnings
It's almost a foregone conclusion that founder and CEO Irwin Simon will lead the company to make multiple acquisitions this year. The company spent several hundred million dollars last year on three significant acquisitions, and a major part of the growth strategy is acquiring and integrating smaller independent food and personal care companies that meet Hain's " A Healthier Way of Life" motto and fit with its other brands. 

Hain has already made one significant investment this year, recently announcing it had invested an undisclosed amount in Chopt Creative Salad Company, a restaurant operator which Hain is a key supplier of. Hain currently supplies Chopt with poultry, chips and juices, and this investment will likely lead to further expansion of that relationship, which could eventually lead to shared retail distribution of Chopt products, as the company's brand expands beyond its current restaurant-only focus of today. 

Hain's investments in growth via acquisition are one of the key reasons why earnings growth has trailed revenue growth over the past couple of years:

HAIN Revenue (TTM) Chart

HAIN Revenue (TTM) data by YCharts

But over a longer term, the company has integrated those acquisitions into operations, and then leveraged its distribution relationships to grow those new brands. That's typically meant that earnings have grown faster than sales over longer periods of time:

HAIN Revenue (TTM) Chart

HAIN Revenue (TTM) data by YCharts

The point? There's a chance that investments like the one just announced in Chopt will lead to slower earnings growth in quarters to come. It really boils down to whether management finds the right opportunities at the right price. 

Organic growth still going strong, driven by demand and solid operations 
A one-time gain from an acquisition with limited prospects going forward isn't the best recipe for success. Hain has a strong history of growing brands that it acquires, benefiting from the company's large distribution with major food retailers in North America and the U.K. as well as a growing presence in Europe. On the last earnings call, Simon highlighted this, pointing out the company had 18 brands grow sales at double-digit rates last year, while another three reported mid- to high-single digit growth. 

The company's sales, general, and administrative expenses increased about 12% last year, well below the 25% growth in sales the company reported. The company must continue to manage operating expense growth, keeping the balance management has found between effective expansion in order to grow sales, and keeping costs from becoming too large a part of revenue. 

A note on gross margins 
Gross margin percent declined pretty sharply last year, falling more nearly 600 basis points. There were two primary drivers behind this drop. The first was last year's nut butter recall, which cost millions in lost sales when the company voluntarily recalled significant amounts of product in an abundance of caution.

The second big driver was the acquisition of Hain Pure Protein, which had before been a part-owned joint venture. This business, by its nature, doesn't command the same kinds of gross margins as the rest of Hain's packaged foods business, but will make up a pretty significant percentage of revenues. In other words, gross margin percent may trend a little lower based on the impact of this business. However, management says that going forward, wholly owning this business will benefit, since it doesn't really require higher SG&A expenses to operate it. 

In other words, it may be a thinner-margin business, but the benefits to operating leverage will drive more of that smaller gross margin to the bottom line. 

Looking ahead 
Over the past several months, Hain Celestial's stock price has fallen off sharply. However, the business continues to grow, and management -- under the incredibly capable Irwin Simon -- keep executing on effective capital allocation into growth and acquisitions, while also keeping expense growth inline. 

While there will be quarters where costs may increase a little more sharply, or earnings don't grow as quickly as they have in the past, keep an eye on the long-term trends, not the short-term results. Three months of results aren't end-all, be-all, but they can help us see how things are playing out for the company. 

From an even bigger-picture perspective, Hain operates in the fastest-growing segment of the food business. Keep that in mind as well. 

Jason Hall owns shares of Hain Celestial. The Motley Fool owns shares of and recommends Hain Celestial. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.