Hawkins Inc (NASDAQ: HWKN)

Sector: Basic Materials Industry: Specialty Chemicals CIK: 0000046250
Market Cap 3.34 Bn
P/B 16.83
P/E 171.16
P/S 8.95
ROIC (Qtr) 11.12
Div Yield % 0.36
Rev 1y % (Qtr) 13.52
Total Debt (Qtr) 293.25 Mn
Debt/Equity (Qtr) 0.58

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 122.91M provides robust 0.42x coverage of total debt 293.25M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 122.91M provides strong 15.79x coverage of stock compensation 7.79M, indicating sustainable incentive practices.
  • Operating cash flow of 122.91M provides exceptional 12.49x coverage of interest expenses 9.84M, showing strong debt service capability.
  • Robust free cash flow of 78.76M exceeds capital expenditure of 44.15M by 1.78x, indicating strong organic growth funding capability.
  • Retained earnings of 478.31M provide full 1.69x coverage of long-term debt 283.44M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 122.91M barely covers its investment activities of (267.44M), with a coverage ratio of -0.46, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 10.41M against inventory of 92.91M, the 0.11 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 122.91M provides thin coverage of dividend payments of (15.24M) with a -8.07 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 10.41M provide limited coverage of acquisition spending of (223.96M), which is -0.05x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 122.38M show weak coverage of depreciation charges of 46.24M, with a 2.65 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 218.63 Bn 38.41 6.61 25.93 Bn
2 SHW Sherwin Williams Co 110.34 Bn 170.54 11.54 13.58 Bn
3 ECL Ecolab Inc. 80.35 Bn 80.18 5.93 8.67 Bn
4 APD Air Products & Chemicals, Inc. 56.37 Bn 48.29 5.86 18.31 Bn
5 PPG Ppg Industries Inc 34.00 Bn 31.05 2.58 7.91 Bn
6 LYB LyondellBasell Industries N.V. 17.46 Bn 5.03 0.49 13.22 Bn
7 DD DuPont de Nemours, Inc. 16.63 Bn 3.65 0.32 8.90 Bn
8 ALB Albemarle Corp 14.44 Bn 48.94 6.36 3.63 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.38 1.52
EV to Cash from Ops. EV/CFO 105.14 12.52
EV to Debt EV to Debt 11.33 13.65
EV to EBIT EV/EBIT 106.15 21.45
EV to EBITDA EV/EBITDA 73.51 14.82
EV to Free Cash Flow [EV/FCF] EV/FCF 240.00 29.24
EV to Market Cap EV to Market Cap 0.99 3.84
EV to Revenue EV/Rev 8.90 89.11
Price to Book Value [P/B] P/B 16.83 5.48
Price to Earnings [P/E] P/E 171.16 16.02
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.46 -5.31
Dividend Payout Ratio % Div Payout % (Qtr) 18.20 -75.74
Dividend per Basic Share Div per Share (Qtr) 0.73 1.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 19.22 23.50
Interest Coverage Int. cover (Qtr) 12.43 -8.92
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.82 -1.67
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 38.39 72.99
Dividend Growth (1y) % Div 1y % (Qtr) 10.61 -3.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 5.67 -31.21
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.45 51.49
EBIT Growth (1y) % EBIT 1y % (Qtr) 7.10 0.57
EBT Growth (1y) % EBT 1y % (Qtr) 3.09 -80.35
EPS Growth (1y) % EPS 1y % (Qtr) 1.78 -90.82
FCF Growth (1y) % FCF 1y % (Qtr) -3.45 -50.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 13.18 219.02
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.06 0.70
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.41
Cash Ratio Cash Ratio (Qtr) 0.11 1.28
Current Ratio Curr Ratio (Qtr) 2.43 3.42
Debt to Equity Ratio Debt/Equity (Qtr) 0.58 0.92
Interest Cover Ratio Int Coverage (Qtr) 12.43 -8.92
Times Interest Earned Times Interest Earned (Qtr) 12.43 -8.92
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 16.10 -333.97
EBIT Margin % EBIT Margin % (Qtr) 11.71 -374.34
EBT Margin % EBT Margin % (Qtr) 10.77 -379.75
Gross Margin % Gross Margin % (Qtr) 23.00 29.26
Net Profit Margin % Net Margin % (Qtr) 8.00 -380.67