Hain Celestial 1Q 2014 Earnings Preview
Hain Celestial (HAIN) reports its 1Q FY2014 results tomorrow, and I hope to provide a brief summary here in the next couple days once I get a chance to look at the report.
I'm particularly interested in Hain's cash flow production, which leveled off last year at $120.96 million. In the 1Q 2013 last year, Hain generated $27.16 million in operating cash flow. Let's see if this fiscal year gets off to a strong start with regard to cash flow production. Hain has issued a substantial chunk of debt in the past year (approximately $275 million), which is fine so long as the business is able to generate sufficient cash flow.
I always take earnings guidance with a grain of salt (especially analyst guidance), but Hain has set its EPS estimate for FY 2014 between $2.95-3.05 (representing an approximate 16%-20% increase from its current EPS of $2.41).
Presently Hain is trading at a P/E of 34.34. This is a reasonable number provided Hain is able to maintain its earnings growth rate over the next several years. Hain is a long-term play with a solid brand portfolio of organic/natural brands and an innovative and experienced Chairman, CEO, and Founder (Irwin Simon).
If Hain is able to grow earnings at an average rate of 17% for the next five years, and trade at a P/E multiple of 25 in five years, the stock would be close to a double from current levels:
2.41*(1.15^5)*25 = $132.09
Hain's stock would have to be substantially clobbered for me to add to my position, but at this point I am very comfortable with the Hain position I opened this January. I look forward to the progress of Hain in the coming years.
Here are the financial highlights of Hain's most recent quarter (4Q 2013) and the 2013 fiscal year:
Fourth Quarter Fiscal Year 2013
-Record net sales of $463.5 million, a 32.1% increase
-GAAP earnings per diluted share of $0.53, a 6.0% increase
-Adjusted earnings per diluted share of $0.65, a 38.3% increase
-Adjusted EBITDA of $62.7 million, a 37.4% increase
Fiscal Year 2013
-Record net sales of $1,734.7 million, a 25.9% increase
-GAAP earnings per diluted share of $2.41, a 39.3% increase
-Adjusted earnings per diluted share of $2.53, a 34.6% increase
-Record Adjusted EBITDA of $235.8 million, a 31.7% increase
And a brief report summarizing expectations for tomorrow's results and the coming year:
Hain Celestial Group (NASDAQ:HAIN) last announced its earnings results on Wednesday, August 21st. The company reported $0.65 earnings per share for the quarter, beating the analysts’ consensus estimate of $0.62 by $0.03. The company had revenue of $463.50 million for the quarter, compared to the consensus estimate of $454.82 million. During the same quarter last year, the company posted $0.47 earnings per share. Hain Celestial Group’s revenue was up 32.1% compared to the same quarter last year. On average, analysts expect Hain Celestial Group to post $3.02 EPS for the current fiscal year and $3.45 EPS for the next fiscal year.