Shares of the packaged-food company jumped on signs of a turnaround.
Shares of Hain Celestial (HAIN 18.59%) were jumping today after the packaged-food company posted better-than-expected results in its fiscal fourth-quarter earnings report.
As of 2:57 p.m. EDT, the stock was up 21.2% on the news.
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Hain’s profitability initiatives are paying off
The maker of Celestial Seasonings tea and other products actually missed revenue estimates in the quarter, reporting a revenue decline of 6% to $418.8 million, which missed estimates at $421.2 million.
Organic revenue, which excludes divestitures, acquisitions, and currency exchange, was down 4% in the quarter.
While the retreat on the top line was disappointing, investors were impressed with the company’s improvements on the cost side. Adjusted-gross margin increased 70 basis points to 23.4%, and adjusted-net income rose slightly from $10 million to $11 million. On a per-share basis, earnings were up from $0.11 to $0.13, which was better than the consensus at $0.08.
Management talked up the progress it’s made in its Hain Reimagined strategy in fiscal 2024 with CEO Wendy Davidson saying, “We transitioned to a global operating model, reducing geographic complexity and driving scale.”
The company has also lowered its debt balance with net debt down from $775 million to $690 million, and it’s aiming to bring its leverage ratio down to two-to-three times adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Can Hain keep climbing?
Hain stock has been struggling for years, as shares are down sharply over the last decade, but investors are still hopeful for a turnaround.
For fiscal 2025, the company expects organic-sales growth to be flat or better, and it called for adjusted EBITDA growth in the mid-single digits.
While that shows the company moving in the right direction, it’s going to take better than at least flat growth to pull off a turnaround.
For now, investors are probably better off watching from the sidelines.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
