Reviewing Dow Chemical (DOW) and Hawkins (HWKN)

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

Insider and Institutional Ownership

67.8% of Dow Chemical shares are held by institutional investors. Comparatively, 58.6% of Hawkins shares are held by institutional investors. 0.9% of Dow Chemical shares are held by insiders. Comparatively, 3.7% of Hawkins shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Dow Chemical pays an annual dividend of $1.84 per share and has a dividend yield of 2.8%. Hawkins pays an annual dividend of $0.88 per share and has a dividend yield of 2.5%. Dow Chemical pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hawkins pays out 28.9% of its earnings in the form of a dividend.

Volatility & Risk

Dow Chemical has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Hawkins has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.

Profitability

This table compares Dow Chemical and Hawkins’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dow Chemical 5.90% 10.92% 3.89%
Hawkins 6.53% 7.94% 4.22%

Valuation & Earnings

This table compares Dow Chemical and Hawkins’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dow Chemical N/A N/A N/A $2.39 27.89
Hawkins $483.59 million 0.78 $22.55 million $3.05 11.62

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

Analyst Recommendations

This is a summary of recent recommendations for Dow Chemical and Hawkins, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dow Chemical 0 3 5 0 2.63
Hawkins 0 0 0 0 N/A

Dow Chemical currently has a consensus price target of $72.14, suggesting a potential upside of 8.24%. Given Dow Chemical’s higher probable upside, equities research analysts plainly believe Dow Chemical is more favorable than Hawkins.

Summary

Dow Chemical beats Hawkins on 7 of the 13 factors compared between the two stocks.

Dow Chemical Company Profile

The Dow Chemical Company manufactures and supplies products used primarily as raw materials in the manufacture of customer products and services. The Company’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils; Consumer Solutions, which consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses; Infrastructure Solutions, which consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses; Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses, and Performance Plastics, which consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.

Hawkins Company Profile

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.

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