Critical Contrast: Hawkins (HWKN) & PolyOne (POL)

Hawkins (NASDAQ: HWKN) and PolyOne (NYSE:POL) are both basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, institutional ownership, dividends and earnings.

Earnings and Valuation

This table compares Hawkins and PolyOne’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hawkins $483.59 million 0.76 $22.55 million $3.05 11.34
PolyOne $3.23 billion 1.05 -$57.70 million ($0.70) -60.06

Hawkins has higher earnings, but lower revenue than PolyOne. PolyOne is trading at a lower price-to-earnings ratio than Hawkins, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Hawkins has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, PolyOne has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500.

Dividends

Hawkins pays an annual dividend of $0.88 per share and has a dividend yield of 2.5%. PolyOne pays an annual dividend of $0.70 per share and has a dividend yield of 1.7%. Hawkins pays out 28.9% of its earnings in the form of a dividend. PolyOne pays out -100.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. PolyOne has increased its dividend for 6 consecutive years.

Institutional and Insider Ownership

58.7% of Hawkins shares are owned by institutional investors. Comparatively, 91.1% of PolyOne shares are owned by institutional investors. 3.7% of Hawkins shares are owned by company insiders. Comparatively, 1.6% of PolyOne shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Hawkins and PolyOne, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hawkins 0 0 0 0 N/A
PolyOne 0 3 4 0 2.57

PolyOne has a consensus target price of $45.00, indicating a potential upside of 7.04%. Given PolyOne’s higher probable upside, analysts plainly believe PolyOne is more favorable than Hawkins.

Profitability

This table compares Hawkins and PolyOne’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hawkins 6.53% 7.94% 4.22%
PolyOne -1.73% 29.46% 6.68%

Summary

PolyOne beats Hawkins on 10 of the 16 factors compared between the two stocks.

About Hawkins

Hawkins, Inc. distributes, blends and manufactures chemicals and specialty ingredients for its customers in a range of industries. The Company conducts its business in three segments: Industrial, Water Treatment, and Health and Nutrition. Its Industrial segment is engaged in providing industrial chemicals, products and services to various industries, such as agriculture, chemical processing, electronics and energy. Its Water Treatment segment is engaged in providing chemicals, equipment and solutions for potable water, municipal and industrial wastewater, industrial process water and non-residential swimming pool water. The Health and Nutrition segment is engaged in providing ingredient distribution, processing and formulation solutions to manufacturers of nutraceutical, functional food and beverage, personal care, dietary supplement and other nutritional food, and health and wellness products.

About PolyOne

PolyOne Corporation (PolyOne) provides specialized polymer materials, services and solutions. The Company’s segments include Color, Additives and Inks; Specialty Engineered Materials; Performance Products and Solutions, and PolyOne Distribution. The Color, Additives and Inks segment provides custom color and additive concentrates in solid and liquid form for thermoplastics, dispersions for thermosets. The Specialty Engineered Materials segment provides specialty polymer formulations, services and solutions for designers, assemblers and processors of thermoplastic materials. The Performance Products and Solutions segment consists of the Geon Performance Materials and Producer Services business units. As of December 31, 2016, the PolyOne Distribution segment distributed more than 4,000 grades of engineering and commodity grade resins.

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