After showing tremendous 39% growth so far in 2016, Hain Celestial (HAIN) stock started falling on August 15. The stock fell 26% to $39.45 in after-hour trading on August 15. It came after the company’s announcement about delaying its fiscal 4Q16 results due to accounting issues and missing fiscal 2016 guidance.
Hain Celestial was expected to report its fiscal 4Q16 and 2016 results this week. Instead, on August 15 after the market closed, the company announced that there would be a delay in the results due to an independent review being conducted by the board’s audit committee. The company also mentioned that it doesn’t expect to reach its sales and earnings guidance for fiscal 2016. The stock was 29% lower at $37.73 in pre-market trading on August 16. It fell 26% on the day with a heavier volume and closed at $39.35. Many firms also downgraded the stock and lowered the target price—this made the stock price fall more.
Hain Celestial’s stock started rising after speculation that it was a potential buyout target after France-based Danone (DANOY) announced the purchase of WhiteWave Foods on July 7. You can read about it in Danone Makes a Sweet Move in Taking Over WhiteWave Foods. With WhiteWave Foods’ stock soaring, Hain Celestial shares also rose by 7 % on the day. It has been on a rising trend—it gained 17% until the fall yesterday. The Market, represented by the S&P 500 Index, also fell by 1% on August 16.
Peers’ stock performance
Hain Celestial produces organic and natural products. Its key brands include Ella’s Kitchen, Earth’s Best Organic, Imagine, Hain Pure Foods, and Celestial Seasonings. Its peers in the industry include Cal-Maine Foods (CALM), Kraft Heinz (KHC), and McCormick & Company (MKC).
- Cal-Maine Foods fell 1% on August 16. Its YTD (year-to-date) returns are -12%.
- Kraft Heinz fell 0.13% on August 16. Its YTD returns are 22%.
- McCormick fell 1% on August 16. Its YTD returns are 19%.
The First Trust Consumer Staples AlphaDEX Fund (FXG) invests ~3% of its portfolio in Hain Celestial. The First Trust NASDAQ-100 Ex-Technology Sector IndexSMFund (QQXT) invests 1.4% of its portfolio in Kraft Heinz.
What’s in this series?
We’ll discuss the drastic revision in analysts’ estimates for fiscal 4Q16 and fiscal 2016 after Hain Celestial’s announcement. We’ll also discuss why the stock was downgraded by most firms. We’ll see what the revised target price is for Hain Celestial.