The stock has dished out a whopping serving of 40.94% gains over the last year. The short interest is high at 6.80% for a defensive consumer staple but is decreasing as they lose appetite for Cream of Bull soup.
Is The Hain Celestial Group, Inc. (NASDAQ:HAIN)’s valuation sky-high?
The Hain Celestial Group, Inc. (NASDAQ:HAIN) has been on a spending spree, buying Blue Print last December, a maker of raw fruit and vegetable juices and raw fruit and nut bars. This brings their product portfolio to 50 brands, including nut milks, Greek yogurt, and gluten-free products. Since 1993 Hain Celestial has grown to over 2,000 products sold in 50 countries.
Barron’s warned last November that a slowdown in Hain’s acquisition pace could create a 30% share price decline. Not to be outdone by Campbell Soup Company (NYSE:CPB)’s, Hain bought British baby food company Ella’s Kitchen for an undisclosed price in May. Although its revenues are lower than Plum Organics at $70 million, Ella’s Kitchen is the top baby food brand in the UK. Its CEO Paul Lindley chose Hain Celestial as the buyer mainly because Hain CEO Irwin Simon had grown Earth’s Best from a $14 million to a $200 million brand.
The Hain Celestial Group, Inc. (NASDAQ:HAIN) trades at a trailing P/E of 28.22 with a 1.67 PEG. Analysts expect five year EPS growth of 16.33%. Hain Celestial has a growing short interest at 19.90%.
The stock has barely outperformed the S&P 500 with a 24.78% gain over 52 weeks. Its EV/EBITDA is 17.70 and price to book is 2.81. So yes, it’s overvalued but it’s acquiring strategically.
Finally, there’s Annie’s, a much smaller company at the very beginning of its growth trajectory. Naturally, it would have a higher trailing P/E of 62.82 (but with a forward P/E of 32.99). It has a PEG of 1.76. However, gross margin stands at 38.72% and it has a 37.77% insider hold.
Annie’s reported Q4 earnings with a beat on top and bottom lines on June 10. It earned an adjusted $0.29 per share compared to $0.24 in the year ago quarter. Total revenue came in at $53 million compared to $44 million a year ago. The stock rose over 6% on the news, but it’s only up 7.55% over the last year despite having a smashing debut. Analysts still expect great things with a 22.5% five year EPS growth rate yoy.
That said, short interest is very high at 38%. This is a long term growth name and Wells Fargo holds 3.28% for its Advantage Discovery Fund.
Just one more spoonful, baby
Of the three the value name is certainly Campbell Soup, but this Plum Organics deal is a great move and should be considered a smart grab for growth. The Hain Celestial Group, Inc. (NASDAQ:HAIN) has performed well over the last few years, and its acquisition pace is still brisk–take that Barron’s. As for Annie’s it has the best growth expected and just reported very good numbers, but I’d like to see them acquire a baby food company, too. Then it would be a real buy.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Hain Celestial. The Motley Fool owns shares of Hain Celestial.
The article Boomers’ Babies Are a Bonanza for Business originally appeared on Fool.com.
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