What happened
Week to date, shares of Hain Celestial Group(NASDAQ: HAIN) were down 17% as of Friday morning, according to data provided by S&P Global Market Intelligence. Investors were disappointed with the company's earnings results released earlier this week. Sales were down again, and management guided for more of the same in the near term.
Year to date, the stock is down 11%, extending the stock's multiyear slide to 48% over the last five years.
So what
Hain is a leading supplier of organic and natural food brands. While the company saw strong sales of Greek Gods yogurt and Earth's Best brands in the U.S., overall sales fell 9% year over year. The performance stands out against larger brands like PepsiCo's snack foods, which reported a double-digit increase in sales last quarter.
The top-line pressure is hitting Hain on the bottom line, too, with adjusted profit falling to $7.4 million from $29.7 million in the year-ago quarter.
Now what
With management forecasting full-year sales to be down between 3% and 4% year over year, the stock is not likely heading higher anytime soon.
Inflation has hurt even the strongest consumer staples brands over the last year. Coca-Cola and PepsiCo have experienced declining volumes in certain categories. But these larger companies are handling it better with price increases, which is keeping their sales growing at solid rates through this challenging economy.
Hain's premium brands don't seem to be as resistant to recessionary forces in the economy. Investors interested in food stocks should stick with the leading grocery brands that have outperformed the market on the back of solid financial results.
10 stocks we like better than Hain Celestial Group
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Hain Celestial Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of May 8, 2023
John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.
