Market reaction to earnings
On November 5, the Hain Celestial Group (HAIN) reported its financial results for its first quarter ended September 30, 2015. The stock didn’t react well to the earnings release. After the company had announced its 1Q16 results, it was trading at $48.1 in the last final minutes before the market closed. This fall was nearly 9% as seen in the last 12 months. It fell by 4.2%, closing at $47.9, on November 5. The stock fell 7.9% during the last week and 15.2% in the last four weeks. HAIN closed at $46.5 on November 9.
Its shares fell by almost 7% to trade at $63.7 following the company’s 2015 fourth quarter earnings release on August 18, 2015. The shares were trading in the range of $67–$70 in the month of July, after gaining as much as 20% at one point this year. The fall in price broke this trend, and now the shares are trading below their maintained volatile price range.
Hain Celestial issued a strong guidance for fiscal 2016 despite the drastic fall in price. The business itself appears strong and is growing quickly. It continues to make acquisitions in a very fragmented natural and organic packaged foods industry, having grown sales and EPS (earnings per share) at a large rate over the past five years. For the upcoming fiscal year, the company issued earnings guidance between $2.11 and $2.26 per share versus analysts’ expectations of $2.19 per share. The company’s shares have risen 17% since the beginning of the year and 57% in the last 12 months.
Hain Celestial, headquartered in Lake Success, New York, manufactures, markets, distributes, and sells organic and natural products in the United States, the United Kingdom, Canada, Europe, and India. It’s a food company that also focuses on personal care products. Its peers in the industry include Pinnacle Foods (PF), Flowers Foods (FLO), and Hormel Foods (HRL).
Pinnacle, Hormel, and Flowers Foods closed at $41.7, $66.6 and $26.6, respectively, on November 9. The PowerShares DWA Consumer Staples Momentum ETF (PSL) invests 3.3% of its portfolio in HAIN. It closed at $56.6 on November 9. On the same date, the PSL ETF’s YTD (year-to-date) returns were 11.0%, while HAIN’s YTD returns were -19.8%. The Guggenheim S&P Midcap 400 Pure Growth ETF (RFG) invests 1.2% of its portfolio in HAIN.
Key highlights of 1Q16
All comparisons are to the first quarter of the fiscal year 2015:
- Net sales reached $687.2 Million, a 9% rise.
- Earnings per diluted share were $0.30, a 67% rise.
- Adjusted earnings per diluted share were $0.37, a 9% rise.
- The company reiterated the fiscal 2016 guidance.