Hawkins, Inc. (NASDAQ:HWKN)

CAPS Rating: 3 out of 5

The Company's principal business is the distribution, blending, and formulation of bulk and chemicals, which it conducts in three principal segments: Water Treatment, Industrial and Pharmaceutical.


Player Avatar SalseroT (91.44) Submitted: 10/18/2009 4:29:39 PM : Underperform Start Price: $22.80 HWKN Score: +5.89

This is indeed a very attractive company, but the PE is not quite what it seems. If you read the FY 2009 annual report, you will see that 2009 was an extraordinarily profitable year for the company because of perfect execution in a period of cyclical shortage a price increases. Management expects to return to normal earnings in 2010 now that chemical prices have returned to normal.

Because of a great TTM, the PE is running below 9.5. If you recalculate the PE based on the "normal" year of 2008, it is actually closer to 25 times earnings ... not a bargain at all! I estimate the trailing 7-year avg PE (including the banner year of 2009) at 22.60.

I might consider buying this sweet company at something like 14 times 2008 earnings or about $12.75 per share, but at $22.60 it's over priced.

Report this Post 3 Replies
Member Avatar mtinvest (94.01) Submitted: 11/6/2009 6:52:49 PM
Recs: 1

Thanks for this valuable post! I just read some online financial statement and not the annual report, when I made my thumbs up on HWKN. The online financial statements (e.g. Reuters) does not mention any unusual/extraordinary income in 2009.

Member Avatar biddy11 (27.03) Submitted: 2/14/2011 1:12:00 AM
Recs: 0

You could have had a 100% return on your investment in only 15 months If you would have got in when you red thumd this stock!

Member Avatar biddy11 (27.03) Submitted: 2/14/2011 1:12:22 AM
Recs: 0


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