HAWKINS, INC. (HWKN): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/HWKN

Headline

Field	Value
Ticker	HWKN
Company	HAWKINS, INC.
Current price	$138.58/sh
Composition	Manufactured, blended or repackaged products 61% / Bulk products 9% / Nutrition 13% / Food 9% / Pharmaceutical 3% / Agricultural 5% / Other 1%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	6.5%
Operating margin today	11.2%
Margin compression (value-band)	-4.7pp
Implied growth	20.4%
Multiple paid	26x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.8pp.

How unusual the bet is: elevated

Reference	Value
vs own history	+0.77σ
cohort percentile (of 212 peers)	77
sustained it ~5 years at this level	37%
implied end-window share	0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	2.75x	4	expensive
Earnings	4.37x	4	expensive
Relative	1.36x	3	expensive
Growth	1.10x	3	expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.8%); the inversion above states its own rate.

Per-Model Detail (n=14)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$99.57	1.39x	yes	FCF base $0.1B, growth 11% (input: historical growth), terminal g 4.0%, WACC 8.8%, 6yr projection
DCF Exit Multiple	Growth	$151.28	0.92x	yes	Exit EV/EBITDA: 16.1x / 18.1x / 20.1x (bear / base = today's held flat / bull), 6yr
Relative Valuation	Relative	$102.02	1.36x	yes	P/E 23.23x (blended: static sector reference 18x + trailing (TTM) 35x), scenarios: 19.2x / 23.2x / 27.3x (bear / base = reference held flat / bull), EV/EBITDA 13.83x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$42.30	3.28x	yes	BV/sh $25.62, ROE (TTM) 15.3%, ke 9.3%
Two-Stage Excess Return	Asset	$53.69	2.58x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$125.93	1.10x	yes	Rev $1.1B, growth 11% (input: historical growth; tapered), Terminal P/S: 2.2x / 2.7x / 3.1x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/E	Relative	—	—	no	—
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$31.17	4.45x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.10B × (1−21%) / WACC 8.8% → EPV (no growth)
Residual Income	Asset	$54.95	2.52x	yes	BV $25.62 + 5yr PV of (ROE (TTM) 15.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$47.47	2.92x	yes	√(22.5 × EPS $3.91 × BVPS $25.62) — Graham's conservative floor
EV/EBITDA Relative	Relative	$87.72	1.58x	yes	EBITDA $0.17B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$32.29	4.29x	yes	FCF $86.1M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$27.85	4.98x	yes	SBC-adj FCF $0.08B (FCF $0.09B − SBC $0.01B) capitalized at Kₑ
Ben Graham Formula	Earnings	$5.72	24.23x	yes	EPS $3.91 × (8.5 + 2×-3.4%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/B	Asset	$6.81	20.35x	yes	BV $25.62 × (ROIC 2.3% / WACC 8.8%) (excluded from median)
P/Sales Sector	Relative	$129.98	1.07x	yes	Revenue $1.08B × sector P/S 2.5x
PEG Fair Value	Relative	—	—	no	—
Earnings Yield	Earnings	$42.27	3.28x	yes	EPS $3.91 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$249.9m
Net debt / NOPAT (after-tax)	2.61x
Net debt / operating income (pre-tax)	2.06x
Share count CAGR (buyback)	-0.3%
Burning cash	no

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Hawkins has quietly turned a regional chemical distributor into a water-treatment roll-up, and the Water Treatment segment now drives the story, with segment sales up 22% to $543.3 million in fiscal 2026 on the back of the $149.9 million WaterSurplus deal and a string of smaller tuck-ins.
• The biggest near-term risk is the cost of that growth: diluted EPS slipped to $3.91 in fiscal 2026 from the prior year, pulled down by roughly $4.4 million of added amortization, interest expense, and earnout accretion in the fourth quarter alone, so the acquisitions are showing up as cost before they show up as earnings.
• Watch the next few prints for whether the six fiscal-2026 acquisitions convert revenue into margin: gross profit grew only 4% in the fourth quarter against 8% sales growth, and the gap between the two is the whole question.

Bull Case

Start with the number that does not fit the obvious narrative. Hawkins looks, on paper, like a low-margin chemical reseller, the kind of business that earns a single-digit operating margin and trades at a single-digit multiple. The market is pricing it at roughly 31 times operating income. That gap is not a mistake; it is the market recognizing that what Hawkins sells is shifting from bulk chemicals toward water-treatment services, and service revenue carries stickier economics than the commodity it replaced. Water Treatment grew 22% to $543.3 million in fiscal 2026, now the largest of the three segments, and it grew because Hawkins bought it: WaterSurplus at $149.9 million plus several smaller deals, six acquisitions in a single fiscal year.

The structural advantage here is route density and switching cost, not chemistry. A municipal or industrial customer that buys treatment chemicals, equipment, and on-site service from one regional supplier does not re-bid that relationship casually. As Hawkins layers acquired books of business onto its existing distribution footprint, each new route makes the next delivery cheaper and each new product makes the customer harder to dislodge. The recent prints show the model working across segments, not just the headline one: the Industrial segment grew about 10.8% to $56.6 million, its third consecutive quarter of gains, helped by customers getting better access to inventory through Hawkins. Fiscal 2026 sales reached $1,083.7 million, up 11% over the prior year, with gross profit rising to $245.1 million.

The balance sheet is built for this strategy rather than against it. Net debt sits near $250 million against trailing operating income around $121 million, roughly two times operating income, which is leverage a chemicals distributor with predictable cash conversion can carry comfortably while it integrates. The peer set lives in tougher neighborhoods: Ashland, a far larger specialty player, spent fiscal 2025 absorbing price and mix headwinds, telling investors its industry "is subject to periodic technological change and ongoing product improvements" and that it must keep developing new products simply to hold margin. Hawkins competes one rung down the value chain, where the moat is logistics and relationships rather than molecules, and where the acquisition pipeline of small private water-treatment operators is long and fragmented. The share count has barely moved, falling slightly over recent years, so the growth has not come at the cost of dilution.

Bear Case

The thing a holder would rather not face is that the price already assumes the roll-up keeps compounding at a pace very few companies sustain. At today's price the market is paying about 31 times operating income, which only makes sense if Hawkins holds growth near its self-funding ceiling for roughly five years. The near-term pace is within what Hawkins has actually delivered; the stretch is in the duration, not the rate. History is not kind to that bet. Among comparable fast-growers, only about 28% sustained that kind of pace for five-plus years. The price is underwriting Hawkins as the exception.

The valuation methods agree the price is leaning forward. The asset-value lens, which reads book value and return on equity, lands near $42 to $54 per share. The earnings-power lens, which capitalizes normalized operating profit with no growth, lands near $31. Peer multiples land near $110. Only the growth-DCF models, the ones that credit the next several years of compounding, reach today's $162.90 (June 27, 2026). When three of four families of method say richly valued and only the growth family reaches the price, the price is a bet on durable compounding that the static frames structurally cannot price. That is a moat-and-durability premium, and it is fragile to anything that interrupts the acquisition cadence.

The fragility is already visible in the most recent numbers. Fourth-quarter diluted EPS fell to $0.74, down 5%, specifically because of about $4.4 million of added amortization, interest expense, and fair-value accretion tied to the earnout liabilities from the six fiscal-2026 deals. Full-year EPS slipped to $3.91 even as sales rose 11%. That is the roll-up tax: each acquisition arrives with intangible amortization, integration cost, and contingent earnout payments that hit reported earnings before the synergies do. Net debt has climbed to roughly $250 million to fund the deals, and interest expense is now large enough to move the EPS line. If acquisition multiples rise, if integration stumbles, or if the water-treatment pipeline of cheap private targets thins out, the engine that justifies a 31-times multiple slows, and the static methods that say this is a $40-to-$110 business become the relevant anchor rather than the forward-growth ones.

Valuation

What the price is betting is straightforward once stated plainly. At $162.90, the market is paying roughly 31 times operating income, and that figure only reconciles if company-wide operating profit grows near its self-funding ceiling for about five years. Hawkins can grow that fast in any given year; it has. The bet is on persistence. Of the companies that have grown at this pace, only about 28% kept it going for five years or more, which is why the priced-in assumption reads as elevated relative to what the fundamentals comfortably support.

How far past the evidence the price sits depends entirely on which lens you trust. The methods split cleanly into two camps. The asset-value and earnings-power approaches, which read what the business is worth on its book value and its current profit stream with no growth credited, land between roughly $31 and $54 per share. Peer multiples land near $110. None of those reach the price. Only the discounted-cash-flow models that project the next several years of compounding get there, and one of them, the exit-multiple DCF, reaches $172.88 precisely by holding today's EBITDA multiple flat for the life of the forecast. That is the question the buyer is answering, not the answer. The spread between the static lenses and the growth lenses is the premium, and it is large: the price sits at three to five times where the asset and earnings-power methods land.

Solvency bounds the downside without rescuing the multiple. Net debt of about $250 million sits at roughly two times trailing operating income, which is manageable leverage for a business with steady cash conversion, and the share count has been flat to slightly down rather than diluting. Interest coverage cannot be computed cleanly because interest expense is not separately broken out in the latest filings, but the recent EPS pressure makes clear the debt is now large enough to matter. The balance sheet can carry the roll-up; what it cannot do is make a 31-times multiple cheap if the acquisition cadence slows.

Catalysts

Hawkins closed its fiscal year on March 29, 2026, and reported fourth-quarter and full-year results on May 13, 2026. The quarter set a record at $265.9 million in sales, up 8%, led by 16% growth in Water Treatment, but fourth-quarter diluted EPS came in at $0.74, down $0.04, as the cost of the year's acquisitions outran their contribution. For the full year, sales reached $1,083.7 million, up 11%, with Water Treatment up 22% to $543.3 million. The single largest deal, WaterSurplus at $149.9 million, closed in the first quarter of fiscal 2026 and anchored the segment's growth.

The forward story is integration. Six acquisitions in one fiscal year leaves a heavy load of amortization, interest, and earnout accretion still flowing through the income statement, and the next several quarters will show whether that load eases as the acquired books mature. The Industrial segment, up about 10.8% to $56.6 million across three consecutive quarters of gains, is the quieter evidence that the broader distribution platform is healthy. Analysts covering the name carry a Buy lean, with a 12-month average target near $188 to $189 and a range of roughly $180 to $200. The watch item is margin conversion: gross profit grew only 4% against 8% sales growth in the fourth quarter, and closing that gap is what turns the roll-up from a revenue story into an earnings story.

Peer Cohorts (Per Segment, With Filing Citations)

Water Treatment (reported)

• ASH (ASHLAND INC.)
• FY2025 10-K: …institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive…
• FY2025 10-K: …coatings, construction, energy, food and beverage, personal care and pharmaceutical. With approximately 2,900 employees worldwide, Ashland serves customers in more than 100 countries. Ashland's reportable operating segments ("reportable segments") include: Life Sciences; Personal Care; Specialty Additives; and…
• OLN (Olin Corporation)
• FY2025 10-K: …treatment activities are higher. Our Epoxy segment also serves a number of applications which experience their highest level of activity during the spring and summer months, particularly civil engineering and protective coatings and other construction materials, including composites and flooring. RAW MATERIALS Basic…
• FY2025 10-K: …water treatment chemicals and a variety of other organic and inorganic chemicals. A significant portion of chlorine production is consumed in the manufacturing of vinyls intermediates, EDC and VCM, both of which our Chlor Alkali Products and Vinyls segment produces. A large portion of our EDC production is utilized…
• CE (CELANESE CORPORATION)
• FY2025 10-K: …customers under multi-year contracts and on the basis of long-standing relationships. Solvents and derivatives customers are primarily engaged in the production of paints, coatings and adhesives. We manufacture formaldehyde for our own use as well as for sale to a few regional customers. Emulsion, RDP and EVA…
• FY2025 10-K: Asia and consist of 51 global production facilities and an additional 20 strategic affiliate production facilities. As of December 31, 2025, we employed 11,434 people worldwide. Business Segment Overview We operate principally through two business segments: Engineered Materials and the Acetyl Chain. See Business…
• EMN (EASTMAN CHEMICAL CO)
• FY2025 10-K: …and acquired a combination of assets and technologies that are operated within four manufacturing "streams", combining scale and integration across multiple manufacturing units and sites as a competitive advantage. • In the polyester stream, the Company begins with paraxylene, ethylene glycol, and integrated…
• FY2025 10-K: ™ , and SunTek ™ window and protective films. 10 Tab le of Contents ADDITIVES & FUNCTIONAL PRODUCTS SEGMENT Overview In the AFP segment, the Company manufactures materials for products in the food, feed, and agriculture; transportation; water treatment and energy; personal care and wellness; building and construction;…
• IFF (INTERNATIONAL FLAVORS & FRAGRANCES INC)
• FY2025 10-K: …pet food and feed additives. Food Ingredients also includes savory solutions (such as spices, marinades, and mixtures) and inclusion products (such as products combining flavorings with fruit, vegetables and other natural ingredients). Health & Biosciences Our Health & Biosciences segment consists of the development…
• FY2025 10-K: …development team partners with our scientists and researchers to optimize consumer appeal and relevance of our product offerings. This collaborative process ensures offerings are refined and ready for integration into final consumer products. Beyond creating new products, our teams advise customers on improving…
• SXT (Sensient Technologies Corp)
• FY2025 10-K: …ingredients, and essential oils as well as flavor systems, including taste modulation, that are responsive to consumer trends and the processing needs of our food and beverage customers. These activities include the development of functional ingredient systems for foods and beverages, savory flavors, and ingredient…
• FY2025 10-K: …impact of atmospheric river events late in the year that disrupted the harvest and production, and higher manufacturing and other costs, partially offset by higher selling prices. Segment operating income as a percent of revenue was 12.8% and 12.2% for 2025 and 2024, respectively. Color Color segment revenue was…
• BCPC (Balchem Corp)
• FY2025 10-K: The Company partners with its customers from ideation through commercialization to bring on-trend beverages, baked goods, confections, dairy and meat products to market. The Company has expertise in trends analysis and product development. With its strong manufacturing capabilities in customized spray dried and…
• FY2025 10-K: …products; proprietary technologies have been combined to create an organic molecule in a form the body can readily assimilate. Sales growth for human nutrition applications is reliant on differentiation from lower-cost competitive products through scientific data, intellectual property and customers' appreciation of…

Food and Health Sciences (reported)

• INGR (INGREDION INCORPORATED)
• FY2025 10-K: …Texture & Healthful Solutions 3,200 Food & Industrial Ingredients-LATAM 3,900 Food & Industrial Ingredients-U.S./Canada 1,300 All Other (i) 2,800 Total Ingredion 11,200 (i) All Other includes corporate employees. Workplace Safety and Employee Wellness The overall well-being and safety of our employees and customers…
• FY2025 10-K: …Some natural high-intensity sweeteners, such as stevia, provide a sweetness or functional alternative to full-caloric sweeteners for our customers. Some food and beverage customers seek these alternatives for their reduced-calorie or sugar-free foods and beverages. Our sweetener products represented 34 percent, 35…
• SXT (Sensient Technologies Corp)
• FY2025 10-K: …positions as of December 31, 2025. As part of its commitment to quality as a competitive advantage, the Company's production facilities hold various certifications, such as those under the International Organization for Standardization (ISO) and those recognized by the Global Food Safety Initiative (GFSI), including…
• FY2025 10-K: …the following: (i) comprehensive and robust raw material approval processes; (ii) analyses of raw materials and finished goods for compliance with specifications prior to use and shipment, respectively; (iii) established guidelines for Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points…
• BCPC (Balchem Corp)
• FY2025 10-K: …Discussion and Analysis of Financial Condition and Results of Operations under Item 7 below and in the Notes to our Consolidated Financial Statements included under Item 8 below, which information is incorporated herein by reference. Human Nutrition and Health The Human Nutrition and Health ("HNH") segment provides…
• FY2025 10-K: …to range from $40,000 to $45,000 for 2026, including our continued efforts to invest in energy and water saving projects, while exploring additional renewable energy opportunities in supporting our future growth and capacities. Environmental and Regulatory Matters The Federal Insecticide, Fungicide and Rodenticide…
• IFF (INTERNATIONAL FLAVORS & FRAGRANCES INC)
• FY2025 10-K: …are ultimately used by IFF's customers in a diverse variety of products, including savory products (soups, sauces, meat, fish, poultry, snacks, etc.), beverages (juice drinks, carbonated or flavored beverages, spirits, etc.), sweets (bakery products, candy, cereal, chewing gum, etc.), and dairy products (yogurt, ice…
• FY2025 10-K: …pet food and feed additives. Food Ingredients also includes savory solutions (such as spices, marinades, and mixtures) and inclusion products (such as products combining flavorings with fruit, vegetables and other natural ingredients). Health & Biosciences Our Health & Biosciences segment consists of the development…
• ADM (ARCHER-DANIELS-MIDLAND CO)
• FY2025 10-K: …sales and profitability. In the case of the Nutrition business, while maintaining efficient and cost-effective operations are important, the ability to drive innovation and develop quality nutritional and wellness solutions for human and animal needs are key factors to remain competitive in the nutrition market.…
• FY2025 10-K: …operations and the growing use of plant‑based alternatives to fossil‑derived materials. This segment also includes the Company's share of the results of its equity investments in Hungrana Ltd., Almidones Mexicanos S.A. de CV, Aston Foods and Food Ingredients, Red Star Yeast Company, LLC, and LSCP, LLC. 93 Table of…

Industrial Solutions (reported)

• OLN (Olin Corporation)
• FY2025 10-K: …all guarantees under the Senior Secured Credit Facility and liens on Collateral be released automatically upon notice by Olin, or after September 30, 2027, upon which time all covenant reliefs expire. International Trade Tariffs and trade flows continue to impact the demand outlook amid varying market responses.…
• FY2025 10-K: …East Alton, IL Independence, MO* Oxford, MS Manitowoc, WI Brass, lead, propellant, explosives Contracted project services U.S. Army Independence, MO* Engineering and construction contracted services Industrial products (8-gauge loads & powder-actuated tool loads) Maintenance applications in power & concrete…
• WLK (Westlake Corporation)
• FY2025 10-K: …reducing waste at our facilities, incorporating more recycled content into our products, seeking to incorporate renewable and bio-based materials, and producing products that support greater efficiency and durability. Housing and Infrastructure Products Business Our HIP segment is primarily comprised of residential…
• FY2025 10-K: …outdoor living products include Zuri ® Premium Decking. PVC Pipe. We manufacture and sell PVC pipe ranging in sizes from ½ inch to 36 inches in diameter, in gasketed, solvent welded, and restrained joint configurations. Our pipe products are used in residential water and sewer applications; municipal potable water…
• ASH (ASHLAND INC.)
• FY2025 10-K: …institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive…
• FY2025 10-K: …coatings, construction, energy, food and beverage, personal care and pharmaceutical. With approximately 2,900 employees worldwide, Ashland serves customers in more than 100 countries. Ashland's reportable operating segments ("reportable segments") include: Life Sciences; Personal Care; Specialty Additives; and…
• CE (CELANESE CORPORATION)
• FY2025 10-K: …where growth is driven by increasing new project commercializations from the pipeline. Our project pipeline model leverages competitive advantages that include our global assets and resources, marketplace presence, broad materials portfolio and differentiated capabilities. Our global assets and resources are…
• FY2025 10-K: …Contents allows us to create a demand pull for our solutions. This business segment also includes 17 strategic affiliates that complement our global reach, improve our ability to capture growth opportunities in emerging economies. • Key Products Elastomers. Vamac ® EAE, our elastomer brand, is primarily used in…
• EMN (EASTMAN CHEMICAL CO)
• FY2025 10-K: …use) emissions by 30 percent by 2035, measured from the Company's 2017 baseline year, in order to achieve net-zero operations by 2050, and to innovate to provide products that enable energy savings and GHG emissions reductions to customers and end-users. Eastman focuses on the triple challenge of climate change,…
• FY2025 10-K: …of high-purity wood pulps for which the Company has dependable sources of supply. Principal Products Product Description Principal Competitors Key Raw Materials End-Use Applications Acetate Tow Estron ™ cellulose acetate tow Celanese Corporation Cerdia International Daicel Corporation Jinan Acetate Chemical wood pulp…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Ashland FY2025 10-K, accession 0001193125-25-289248 · analyst consensus compilation, MarketBeat/Public, June 2026