Zacks Analyst Blog Highlights: The Hain Celestial Group, General Mills, Kraft Foods, CB Richard Ellis Group and Jones Lang Lasalle

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Feb 07, 2011, 09:30 ET

CHICAGO, Feb. 7, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: The Hain Celestial Group Inc. (Nasdaq: HAIN), General Mills Inc. (NYSE: GIS), Kraft Foods Inc. (NYSE: KFT), CB Richard Ellis Group Inc. (NYSE: CBG) and Jones Lang Lasalle Inc. (NYSE: JLL).

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Here are highlights from Friday's Analyst Blog:

Hain Celestial Tops Estimates

The Hain Celestial Group Inc. (Nasdaq: HAIN), which distributes, markets and sells various natural and organic foods as well as personal care products, recently posted better-than-expected second-quarter 2011 financial results.

The quarterly earnings of 39 cents a share beat the Zacks Consensus Estimate of 37 cents, and climbed 39.3% from 28 cents delivered in the prior-year quarter. On a reported basis, including one-time items, earnings came in at 37 cents a share, up 37% from 27 cents earned in the year-ago quarter.

Quarterly Performance

Revenue in the quarter increased by 20.6% to $291.9 million from $242 million delivered in the prior-year quarter, and also came well ahead of the Zacks Consensus Estimate of $273 million. Hain Celestial was able to post healthy sales aided by United States, Canadian and Continental European operations as well as recent acquisitions.

Hain Celestial had previously acquired World Gourmet Marketing, including its Sensible Portions brand of Garden Veggie Straws, Pita Bites and other snack products. The company also acquired Churchill Food Products Limited, manufacturer and distributor of food-to-go products in the United Kingdom. Additionally, the company purchased The Greek Gods brand.

The company most recently announced the acquisition of Danival, the manufacturer of certified organic food products with facilities in France, and GG UniqueFiber, the manufacturer of all natural high fiber crackers in Norway. These acquisitions will be accretive to fiscal 2012 earnings.

Acquisitions have been a key part of Hain Celestial's strategy to build market share. Not only have they widened the company's geographical presence, they have also provided opportunities to cross-sell products in the U.S., Canadian, and European markets.

We believe that with an extensive portfolio of well-known brands, Hain Celestial offers investors one of the strongest growth profiles in the industry. The stock is poised to rise as the economy gradually revives and demand for healthier and natural food improves. The reported quarter witnessed growth in U.S. consumption for natural organic foods.

Despite a 20% rise in cost of sales, gross profit soared 22.2% to $85.4 million in the quarter, whereas gross profit margin expanded to 29.3% from 28.9% in the prior-year quarter. On an adjusted basis, gross profit margin increased 46 basis points to 29.4%, reflecting sales of higher margins products and cost-containment efforts.

Financial Aspects

Hain Celestial generated operating free cash flow of $59.6 million for the 12-month period ended December 31, 2010. The company ended the quarter with cash and cash equivalents of $26.3 million and long-term debt of $240.1 million, with debt being 29.7% of shareholders' equity of $807.2 million. Capital expenditures for the quarter were $2.2 million.

Guidance

Hain Celestial reiterated its fiscal 2011 earnings guidance range of $1.24 to $1.31 per share. However, the company revised its revenue forecast and now expects it between $1,060 million and $1,080 million, up from $1,025 million to $1,050 million earlier projected.

The current Zacks Consensus Estimate for fiscal 2011 is $1.27, which is supported by 11 analysts, and dovetails with the company's guidance range.

Currently, we have a long-term "Neutral" rating on the stock. Hain Celestial, which competes with General Mills Inc. (NYSE: GIS) and Kraft Foods Inc. (NYSE: KFT), holds the Zacks #3 Rank, which translates into a short-term 'Hold' rating, and correlates with our long-term view.

CB Richard Ellis Earnings Zoom

CB Richard Ellis Group Inc. (NYSE: CBG), reported fourth-quarter 2010 revenues of $1.7 billion compared with $1.3 billion in the year-earlier quarter, reflecting an increase of 27% - the highest year-over-year quarterly revenue growth since fourth quarter 2007. The revenues in the reported quarter beat the Zacks Consensus Estimate of $1.5 billion.

The company reported a net income of $95.1 million or 30 cents per share during the quarter, compared with $64.3 million or 21 cents in the year-ago period. Excluding non-recurring items, CB Richard Ellis reported a net income of $115.4 million or 36 cents per share during the quarter compared with $86.0 million or 28 cents in the year-earlier quarter. The fourth quarter recurring earnings also surpassed the Zacks Consensus Estimate by 2 cents.

For full year 2010, the company reported revenues of $5.1 billion compared with $4.2 billion in 2009, reflecting a year-over-year increase of 23%. CB Richard Ellis is the world's largest commercial real estate services firm in terms of 2010 revenue. The revenues in the reported fiscal exceeded the Zacks Consensus Estimate of $5.0 billion.

For fiscal 2010, the company reported a net income of $200.3 million or 63 cents per share, compared with $33.3 million or 12 cents in 2009. Excluding non-recurring items, CB Richard Ellis' net income more than doubled in 2010 to $239.8 million or 75 cents per share, compared with $109.8 million or 39 cents in the previous year. The fiscal recurring earnings surpassed the Zacks Consensus Estimate by 3 cents.

Fourth quarter 2010 EBITDA (earnings before interest, tax, depreciation, and amortization) increased 44% to $241.0 million, compared to $167.1 million in the year-ago quarter. For full year 2010, EBITDA increased 74% to $647.5 million, compared to $372.1 million in 2009. The better-than-expected results were primarily due to improved performance across almost all geographic regions and business lines.

CB Richard Ellis witnessed robust global property sales and leasing activities during the quarter buoyed by its leading market position in the world's major business centers. Global property sales revenue surged 40% year-over-year during fourth quarter 2010, as credit availability became wide and broad investor sentiment improved. CB Richard Ellis signed 34 long-term real estate outsourcing contracts (including 18 new clients) during the quarter. Global leasing revenue increased 35% during the quarter as market fundamentals continued to stabilize and demand for space rebounded.

Geographically, revenue growth during the quarter was led by the Americas– the largest business segment of the company. Revenue in the Americas increased 35%, driven by robust growth in both property sales (66%) and leasing (45%). In the Asia Pacific region, revenue rose 18%, powered by strong increases in India and China. Revenues for the EMEA (Europe, Middle Eastand Africa) region grew by 7% year-over-year due to continued strong growth in property sales in core markets, particularly in the U.K. and France.

The Global Investment Management segment, comprising investment management operations in the U.S., Europe and Asia, reported revenues of $79.8 million during the quarter compared with $38.7 million in the year-earlier quarter. Assets under management totaled $37.6 billion at the end of the quarter, up 8% from year-end 2009. During the quarter, Development Services segment, that includes real estate development and investment activities primarily in the U.S., reported revenues of $17.4 million compared with $24.5 million in the year-ago quarter. The development pipeline of the company totaled $4.9 billion at year-end 2010.

The gradual revival in the overall economy has enabled the company to drive its growth engine and management further expects to retain the momentum in 2011 as well. We also remain encouraged by indications of stabilization and recovery of market conditions. At year-end 2010, CB Richard Ellis had cash and cash equivalents of $506.6 million compared to $741.6 million in the year-earlier period.

For full year 2011, the company expects recurring earnings in the range of $0.95 to $1.05 per share. We maintain our 'Outperform' recommendation on the stock, which presently has a Zacks #2 Rank that translates into a short-term 'Buy' rating. Meanwhile, we have a 'Neutral' recommendation and a Zacks #2 Rank for Jones Lang Lasalle Inc. (NYSE: JLL), one of the competitors of CB Richard Ellis.

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