NEW YORK (
(HAIN - Get Report) shares were surging, up 10.3% to $95.85 by midday Wednesday, as Wall Street cheered the organic and natural food company's better-than-expected guidance for next year, despite concerns over the acquisitive company's organic growth potential.
"Our growth is not just coming from acquisitions, it's coming from existing brands and we'll continue to do that," Chairman and CEO Irwin Simon said on Hain Celestial's earnings call earlier Wednesday.
Hain Celestial, based in Lake Success, N.Y. said Wednesday it expects annual EPS between $3.72 and $3.90 a share for fiscal 2015. Net sales were forecasted to range between $2.725 billion and $2.8 billion. Consensus estimates as tallied by Thomson Reuters had called for fiscal 2015 EPS of $3.73 on revenue of $2.51 billion.
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For its fiscal fourth quarter, Hain Celestial reported adjusted earnings of 90 cents a share from continuing operations. Net income for the three months ending June 30 was $35.7 million, or 70 cents a share, compared to $25.9 million, or 53 cents a share in last year's quarter. Net sales rose 26% over the year earlier quarter to $584 million.
"We think we're pretty well-positioned to continue to drive strong organic growth" in the mid-to-high single digits fueled by the fast-growing snack category, tea and personal care, for instance, said John Carroll, CEO of Hain's Celestial U.S. business on the company's fourth-quarter earnings call.
That said Simon sees more potential for acquisitions, particularly in categories such as yogurt and "meat free," however future acquisitions will likely be of smaller companies.
"If you're asking me if [there is a] $1 billion acquisition out there to do, the answer is no," Simon said in answer to an analyst's question on the call.
There is opportunity for the company to buy smaller companies -- in the range of $7 million to $20 million -- that are struggling to compete in the natural and organic industries. By putting them through the Hain infrastructure "they could be $100 million brands," he said.
"I still continue to see the fresh category ... where there is good opportunity for growth," Simon said. "I still think there is a big opportunity in meat free. ... There's so many opportunities in the yogurt category."
The natural and organic food company operates roughly 45 brands, according to a quick count on its Web site. Hain Celestial
has been an acquisitive company. In fiscal 2014 alone, the company has acquired Tilda Limited, a Basmati and specialty rice product company in the Middle East and Europe, with plans to expand the brand to the U.S. It also purchased Rudi's Organic Bakery, a Boulder, Colo.-based organic and gluten-free bakery, for $61.3 million. Last month, the company purchased the remaining interest it did not already own of Hain Pure Protein, an organic poultry company, from Pegasus Capital Advisors for $40 million. Read More: Jim Cramer's Mad Dash: Hain Celestial Group Still Has Growth
--Written by Laurie Kulikowski in New York.
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