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The Hain Celestial Group Inc - Stock Quote HAIN

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Morningstar's The Hain Celestial Group Inc Stock Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Hain Celestial's Q3 Results Disappoint, but Selloff Overdone, Leaving Shares Attractively Valued

Analyst Note

| Rebecca Scheuneman, CFA |

While we were disappointed in no-moat Hain Celestial’s results for the fiscal third quarter ended March, we view the 20% drop in its stock as an overreaction, leaving the shares attractively valued, even after the high-single-digit percentage reduction in our $42.50 fair value estimate that we expect to make. European sales fell 8% in organic constant currency, although we expect most of the pressure to be transitory. Hain suffered a 4% hit as a deal to provide private-label plant-based beverages terminated sooner than expected, but given its low-cost position and strong demand for the product, we think this business will be fully replaced by January. Its European sales took an additional 3% hit when price negotiations stalled with a few large retailers and Hain opted to hold shipments, although all price increases are now in place as proposed and shipments have resumed. Finally, European sales were pressured from consumers returning to restaurants (after being locked down last year), although this is the last quarter of difficult comparisons. We plan to reduce our fiscal 2022 consolidated organic sales growth forecast to flat from 5% previously. Conversely, Hain’s North American organic sales grew 8.5%, with volume remaining resilient in the face of price increases and most brands realizing market share gains. While high gasoline prices are leading some consumers to trade down to lower-priced fare, we think Hain’s elasticities will continue to be resilient, given the company's affluent consumer base.

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The Hain Celestial Group Inc's Company Profile

Business Description

Hain Celestial makes better-for- you natural and organic consumer products, with 67% of fiscal 2021 revenue considered grocery, 16% snacks, 10% personal care, and 7% tea. Some of the company's most recognized U.S. brands (48% of sales) are Celestial Seasonings, Terra, Garden of Eatin', Sensible Portions, Greek Gods yogurt, and Earth's Best baby food. Hain also maintains several market- leading brands in the U.K. (31% of sales), such as Ella's Kitchen baby food, New Covent Garden soup, Linda McCartney's plant-based meats, Sun-Pat nut butters, and Hartley's jams and gelatins. Its products can be found in traditional grocery stores, natural foods supermarkets, specialty health stores, mass-market retailers, club warehouses, drugstores, convenience stores, restaurants, and e-commerce sites.

Contact
1111 Marcus Avenue, Lake Success
New York, NY, 11042
T +1 516 587-5000
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Mar 31, 2022
Fiscal Year End Jun 30, 2021
Stock Type Slow Growth
Employees 3,087