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The Hain Celestial Group Inc HAIN

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Morningstar’s Analysis

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We Don’t Think Hain Celestial’s Shares Reflect the Full Potential of Its Turnaround Efforts

Analyst Note

| Rebecca Scheuneman, CFA |

We think investors underestimate the degree of improvements to result from Hain Celestial’s turnaround, which has been underway since Mark Schiller took the helm in fiscal 2019 after a string of acquisitions left the firm with onerous complexity and a lack of focus. To date, the firm has undergone significant portfolio reshaping (it divested 20% of its sales base) and overhauled its marketing and innovation practices, leading to improved sales trends (excluding product discontinuations) and a 440-basis-point improvement in operating margins. Over the long term, we think Hain will enjoy 7% organic sales growth (in line with category growth), and 15% operating margins, driven by $200 million in cost savings we expect by fiscal 2025. This is above the 5% growth and 13% operating margins implied in current FactSet consensus.

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Company Profile

Business Description

Hain Celestial makes better-for-you natural and organic consumer products, with 67% of fiscal 2021 revenue considered grocery, 16% snacks, 10% personal care, and 7% tea. Some of the company’s most recognized U.S. brands (48% of sales) are Celestial Seasonings, Terra, Garden of Eatin’, Sensible Portions, Greek Gods yogurt, and Earth’s Best baby food. Hain also maintains several market-leading brands in the U.K. (31% of sales), such as Ella’s Kitchen baby food, New Covent Garden soup, Linda McCartney's plant-based meats, Sun-Pat nut butters, and Hartley's fruit spreads. Its products can be found in traditional grocery stores, natural foods supermarkets, specialty health stores, mass-market retailers, club warehouses, drugstores, convenience stores, restaurants, and e-commerce sites.

1111 Marcus Avenue, Lake Success
New York, NY, 11042
T +1 516 587-5000
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Jun 30, 2021
Fiscal Year End Jun 30, 2021
Stock Type Slow Growth
Employees 3,087