Hain Celestial Beats 1Q Estimates On Pandemic-Led Demand


Organic products maker Hain Celestial posted better-than-expected results for the first quarter of fiscal 2021 (ended Sept. 30) driven by higher at-home consumption of its products amid the COVID-19 pandemic.

Hain Celestial’s (HAIN) 1Q FY21 sales grew 3.4% year-over-year to $498.6 million driven by a 3.3% rise in its sales from North America and 3.6% growth in the International segment’s sales. Shelter-in-place and social distancing trends amid the pandemic have favorably impacted the demand for the company’s grocery, snack, tea and certain personal care product categories. In contrast, Hain’s sun care products and the fruit component of its business in the UK have been hit hard by the current crisis.

Hain’s adjusted EPS jumped over 237% year-over-year to $0.27 driven by higher sales, productivity and transformation initiatives, as well as a favorable product mix in both North American and International segments. Overall, the company exceeded analysts’ sales and EPS estimates of $492.6 million and $0.19, respectively. (See HAIN stock analysis on TipRanks)

CEO Mark L. Schiller commented, “We are very pleased with our first quarter results, which exceeded our initial expectations of several hundred basis points of margin expansion, significant growth in adjusted EBITDA and mid-single digit adjusted net sales growth. The strength in adjusted earnings, in both the North America and International segments once again showcases our continued ability to execute against our transformational plan.”

“While the current macro operating environment remains fluid, we remain confident and committed to sustainable long-term growth, including continued gross and adjusted EBITDA margin expansion and double-digit adjusted EBITDA growth in fiscal year 2021,” the CEO added.

For 2Q FY21, the company expects mid-single digit topline growth (on a constant currency basis adjusted for divestitures and discontinued brands) with “several hundred basis points” of gross margin improvement.

In September, Truist Financial analyst William Chappell upgraded Hain Celestial to Buy from Hold and increased the price target to $40 from $30. The analyst stated that an interaction with the company’s management gave him increased confidence that the story is far from over despite a remarkable turnaround over the past 18 months. Additionally, Chappell believes that the pandemic is serving as a shot in the arm for the entire healthy living category, which he argues will benefit health and wellness companies like Hain Celestial for years to come.

Shares have risen 18.7% year-to-date and the average analyst price target of $36.33 indicates further upside potential of 18% in the coming year. Based on 4 Buys and 5 Holds, the Street has a cautiously optimistic Moderate Buy analyst consensus for Hain Celestial.

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