What Analysts Expect From Hain Celestial

The Hain Celestial Group Inc. (HAIN) is set to report FQ2 2014 earnings after the market closes on Tuesday, February 4th. Hain Celestial is a healthy and organic foods company which also sells personal care products. Some of their more well known products include Terra Chips, Celestial Seasonings tea, and Soy Dream soy milk. Over the past year the company’s stock has done well and the bar for future performance has been set high by Wall Street. Here’s how buy side analysts expect HAIN to report this quarter.

The current Wall Street consensus expectation is for HAIN to report 88c EPS and $544.48M revenue while the current Estimize.com consensus from 10 Buy Side and Independent contributing analysts is 86c EPS and $537.33M revenue. This quarter the buy-side as represented by the Estimize.com community is expecting HAIN to miss the Street’s expectations on both profit and revenue.

Over the previous 6 quarters the consesus from Estimize.com has been more accurate than Wall Street in forecasting Hain’s profit and revenue 3 times each. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing an average differential compared to recent quarters.

The distribution of estimates published by analysts on the Estimize.com platform range from 80c to 91c EPS and $527.00M to $509.99M in revenues. This quarter we’re seeing a larger distribution of estimates on profit compared to previous quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.

Throughout the quarter the EPS consensus from Wall Street increased from 84c to 88c while the Estimize consensus increased from 84c to 86c.  Wall Street raised its revenue consensus from $542.68M to $544.48M while the consensus from the Estimize community fell from $539.41M to $537.33M. Timeliness is correlated with accuracy and at the end of the quarter we saw the Estimize community bring its numbers up.

The analyst with the highest estimate confidence rating this quarter is j_holliman who projects 85c EPS and $537.00M in revenue. In the Winter 2014 season j_holliman rated as the 22nd best analyst and is ranked 7th overall among over 3,700 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case j_holliman agrees with the Estimize community that HAIN will miss Wall Street expectations on Tuesday.

The expectations from Wall Street are high for this quarter, and the Estimize.com community is not expecting the Hain Celestial Group to meet them. Although the expectations are high for HAIN we could see the stock price come down if the company fails to meet the buy-side’s expectations.