Hain Celestial Group Inc. shares tumbled to a three-month low after profit failed to beat estimates for the first time in five quarters as sales growth slowed.
The organic food and beverage company reported adjusted fiscal third-quarter earnings of 45 cents a share, in line with the average estimate of analysts in a Bloomberg survey. Profit in the previous four quarters surpassed forecasts by an average of 1.9 percent. Revenue grew 19 percent to $662.7 million for the smallest increase in more than a year.
Hain Celestial, whose brands include Earth’s Best baby food and Greek Gods yogurt, trades at a valuation of 31 times estimated earnings, 41 percent above the average multiple of 22 among a Bloomberg Intelligence group of 47 North American packaged food makers.
The Lake Success, New York-based company’s shares slid 4.2 percent to $58.68, almost erasing its gain for 2015 after five straight years of double-digit annual growth.
“When a stock trades at this type of valuation you need to see signs of acceleration or at least maintaining its prior growth rate,” Mitchell Pinheiro, a New York-based analyst at Imperial Capital LLC, said by phone. “Valuations are stretched and perhaps because it’s a crowded play people are getting off the train.”
Hain Celestial said the stronger dollar reduced sales by $26 million and shaved 1 cent a share off adjusted earnings. The greenback climbed in March to the highest level in data going back to 2005.
An e-mail and voicemail for Mary Anthes, senior vice president of investor relations at Hain, were not immediately returned.
The stock surged six fold in the past five calendar years, and climbed to an all-time high of $65.95 in April. Since then, the shares have fallen 11 percent.
“The stock has been a huge performer and continues to be aggressive on acquisitions and its core products,” Bloomberg Intelligence analyst Kenneth Shea said. “There was nothing that accounted for a fundamental weakness. It’s clear the market is placing high value on growth.”