Hawkins Inc (NASDAQ: HWKN)

Sector: Basic Materials Industry: Specialty Chemicals CIK: 0000046250
Market Cap 3.01 Bn
P/B 5.80
P/E 36.51
P/S 2.83
ROIC (Qtr) 11.20
Div Yield % 0.64
Rev 1y % (Qtr) 7.90
Total Debt (Qtr) 278.29 Mn
Debt/Equity (Qtr) 0.54
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About

Investment thesis

Bull case

  • Strong operating cash flow of 137.44M provides robust 0.49x coverage of total debt 278.29M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 137.44M provides exceptional 11.40x coverage of interest expenses 12.06M, showing strong debt service capability.
  • Operating cash flow of 137.44M provides strong 17.37x coverage of stock compensation 7.91M, indicating sustainable incentive practices.
  • Robust free cash flow of 87.69M exceeds capital expenditure of 49.75M by 1.76x, indicating strong organic growth funding capability.
  • Retained earnings of 488.65M provide full 1.82x coverage of long-term debt 268.48M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 137.44M barely covers its investment activities of (259.74M), with a coverage ratio of -0.53, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 8.21M against inventory of 85.93M, the 0.10 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 137.44M provides thin coverage of dividend payments of (15.44M) with a -8.90 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 8.21M provide limited coverage of acquisition spending of (210.56M), which is -0.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 123.90M show weak coverage of depreciation charges of 49.54M, with a 2.50 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Specialty Chemicals
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LIN Linde Plc 259.51 Bn 110.86 9.26 25.93 Bn
2 SHW Sherwin Williams Co 101.80 Bn 102.98 9.01 13.58 Bn
3 ECL Ecolab Inc. 86.78 Bn 76.91 6.25 8.67 Bn
4 APD Air Products & Chemicals, Inc. 58.65 Bn 49.06 6.08 18.14 Bn
5 PPG Ppg Industries Inc 31.75 Bn 25.73 2.06 7.91 Bn
6 DD DuPont de Nemours, Inc. 21.19 Bn -27.20 3.09 3.19 Bn
7 IFF International Flavors & Fragrances Inc 21.16 Bn -8.98 1.87 6.60 Bn
8 ALB Albemarle Corp 19.87 Bn -29.33 3.86 3.19 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.37 1.62
EV to Cash from Ops. EV/CFO 23.95 10.83
EV to Debt EV to Debt 11.83 16.61
EV to EBIT EV/EBIT 26.57 -61.80
EV to EBITDA EV/EBITDA 19.15 -9.02
EV to Free Cash Flow [EV/FCF] EV/FCF 37.54 6.67
EV to Market Cap EV to Market Cap 1.09 5.10
EV to Revenue EV/Rev 3.10 72.68
Price to Book Value [P/B] P/B 5.80 5.37
Price to Earnings [P/E] P/E 36.51 14.34
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.34 -5.46
Dividend Payout Ratio % Div Payout % (Qtr) 18.60 -74.36
Dividend per Basic Share Div per Share (Qtr) 0.74 1.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 17.50 9.98
Interest Coverage Int. cover (Qtr) 10.27 -9.95
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.71 -1,110.27
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -1.16 83.68
Dividend Growth (1y) % Div 1y % (Qtr) 8.82 -3.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 6.61 -80.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.38 48.27
EBIT Growth (1y) % EBIT 1y % (Qtr) 6.40 11.23
EBT Growth (1y) % EBT 1y % (Qtr) 0.50 -62.96
EPS Growth (1y) % EPS 1y % (Qtr) 1.02 -125.48
FCF Growth (1y) % FCF 1y % (Qtr) 9.29 4.34
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 11.08 193.82
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.09 0.70
Cash Payout Ratio Cash Payout (Qtr) 0.08 0.40
Cash Ratio Cash Ratio (Qtr) 0.08 1.24
Current Ratio Curr Ratio (Qtr) 2.35 3.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.54 0.92
Interest Cover Ratio Int Coverage (Qtr) 10.27 -9.95
Times Interest Earned Times Interest Earned (Qtr) 10.27 -9.95
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 16.30 -320.64
EBIT Margin % EBIT Margin % (Qtr) 11.65 -360.99
EBT Margin % EBT Margin % (Qtr) 10.52 -366.51
Gross Margin % Gross Margin % (Qtr) 22.90 29.06
Net Profit Margin % Net Margin % (Qtr) 7.80 -367.54