Hain bought Greek Gods three years ago, and, as Simon stated on the call, “it’s approaching $100 million (in sales) worldwide.” Yogurt is a $6.2 billion business in the U.S., and the fastest-growing dairy category, with Greek yogurt, in particular, experiencing tremendous growth. Given yogurt’s growth dynamics, investors may want to put Lifeway Foods, Inc. (NASDAQ:LWAY) on their watchlists. It’s a $264 million market cap company focused on probiotic (“good bacteria”) foods and beverages. Its flagship product is kefir, which is similar to yogurt, and it also produces a line of yogurts. French dairy giant Danone owns about a 20% stake, so a buyout is always a possibility.
Arrowhead Mills, an organic whole grains line, might have made this top performer list. There were supply constraints that limited production, as noted during the conference call. As the company grows, investors should monitor the supply situation, in general.
Two personal care brands were top performers. It bears mention that Hain’s just-announced next CFO, Stephen Smith, is currently the CFO of cosmetics and personal care products company Elizabeth Arden. Smith, who starts September 3, replaces longtime CFO Ira Lamel, who is retiring.
5. Hain’s eye for acquisitions remains sharp
“Juicing” has become quite popular. That term is often used synonymously with “juice cleansing,” which involves drinking only cold-pressed juices for a certain number of days to detoxify one’s system. Hain acquired BluePrint, a leader in cold-pressed and other juices in the U.S., so it now has a product line to address this growing market.
In addition to BluePrint and Ella’s Kitchen, Hain made one other acquisition in fiscal 2013. It acquired the U.K.’s Premier Foods’ jams and spreads brands, two of which are Hartley’s (jams) and Sun-Pat (peanut butter).
6. Numbers remain solid and the company increased guidance
Here’s are some key numbers compared to a few peer companies.
| Company | Trailing P/E | Fwd P/E | 5-Yr PEG | 1-Yr Rev Growth | 1-Yr EPS Growth | Net Margin (ttm) | ROE (ttm) | Debt/Equity (mrq) |
| Hain Celestial | 33.9 | 24.0 | 1.5 | 21.9% | 40.7% | 6.9% | 12.6% | 0.6 |
| WhiteWave | 33.0 | 23.8 | 1.6 | 13% | 5.9%* | 4.6% | 11.2% | 0.9 |
| Annie’s | 68.1 | 36.3 | 2.0 | 11.3% | 150% | 6.6% | 16.6% | 0 |
| Lifeway | 42.2 | 32.9 | 1.4 | 16.3% | 100% | 7% | 15.9% | 0.1 |
Yahoo! Finance & Morningstar; annual numbers are for last full fiscal year; *net income. Data to Aug. 22.
Given Hain upped fiscal year 2014 guidance, its forward P/E and PEG have decreased from pre-earnings levels of nearly 25 and 1.8, respectively. So, based upon these valuation metrics, it’s a “better buy” now than it was pre-earnings, despite the jump in its stock price.
As to guidance, the company provided a sales range of $2.025 to $2.050 billion, an increase of about 17% over fiscal 2013; and an EPS range of $2.95 to $3.05, an increase of 16% to 20%. So, Hain is expecting margins to remain the same or slightly increase.
Takeaway
Organic food sales are projected to grow at about an 8% annual rate for at least the next five years. That growth rate increases if the more ambiguous “natural” and “healthy” foods are included.
Hain Celestial remains an attractive investment in this niche as it’s Whole Foods’ largest supplier, has product lines in the fastest-growing sub-categories, continues to post solid numbers, and just increased guidance. The other companies noted above also bear watching, given the growth dynamics of this niche.
The article 6 Takeaways From Hain Celestial’s Healthy Quarterly Results originally appeared on Fool.com is written by BA McKenna.
BA McKenna has no position in any stocks mentioned. The Motley Fool recommends Hain Celestial. The Motley Fool owns shares of Hain Celestial and WhiteWave Foods (NYSE:WWAV).
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