Hain Celestial (HAIN - Get Report) reports second-quarter fiscal 2016 earnings on Monday. The report shouldn't be too much of a surprise, since the company lowered guidance two weeks ago. Investors are still searching for a bottom in the stock, and management's outlook could be the catalyst that turns things around.

Two weeks ago, management lowered fiscal 2016 sales estimates from the previous $2.97 billion to $3.11 billion estimate to $2.9 billion to $3.04 billion. The company also cut earnings-per-share guidance from an initial $2.11 to $2.26 down to a range of $1.95 to $2.10. Hain blamed slower sales, increased competition and the effects of a stronger dollar for the reduced outlook.

The lower guidance means Hain is expected to grow revenue just 8.5% this year and about 7% next. While that may seem pretty good, recall that as recently as last year, Hain grew revenue by 25.6%, on top of 24% the year earlier.

The stock has plunged. In the last year, it is down 37% and can't seem to find a bottom. While analysts agree the market for organic foods is growing, the business has become much more competitive.

How competitive? For example, Hormel (HRL - Get Report) , the makers of Spam, recently spent over $700 million to buy Applegate Organic Meats, which is available at Whole Foods (WFM) .

Supermarket chain Kroger (KR - Get Report) said organic foods now account for $11 billion of its $108 billion in revenue. The segment has been growing by double digits for the last five years. By comparison, Whole Foods has about $15 billion in total sales.

To me, Hain looks like a mid-single-digit grower. The big revenue growth numbers of the past mostly came from acquisitions, and not raging demand for organic mac and cheese.

If the management team sandbagged the lower guidance it gave two weeks ago, the stock could bounce higher on a "better-than-expected" quarter. At this point, sentiment is probably too negative and the stock is ready for a bounce, but I don't think Hain stock can regain the momentum of the past few years.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.