Hawkins Inc. Common Stock (HWKN)

FairStock Score: 37/100 — MIXED

Key Financials

Strengths

• Generates $70 million in annual free cash flow (2.0% yield on market cap)
• Solid return on equity of 16.9% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.42, providing financial flexibility
• Altman Z-Score of 5.8 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($47) with negative 257% margin of safety—limited downside protection
• No meaningful dividend despite modest growth—total return depends entirely on multiple expansion

AI Analysis

Hawkins Inc. Common Stock is a small-cap basic materials company valued at $3.5 billion. The business generates $1.1 billion in annual revenue with a 1.3% net margin and $70 million in free cash flow. From a quality standpoint, Hawkins shows Altman Z-Score of 5.8 confirms fortress-level solvency and adequate 17% ROE. On valuation, the stock is commanding a steep 42.4x multiple, with trades far above its Graham Number ($47) with no margin of safety. Growth dynamics show revenue growing at 7.9% and profit growth of -4.7%. Our composite FairStock Score of 37/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $70 million in annual free cash flow (2.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 42x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer