Hawkins (NASDAQ:HWKN) vs. International Flavors & Fragrances (NYSE:IFF) Critical Review

Hawkins (NASDAQ:HWKN) and International Flavors & Fragrances (NYSE:IFF) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Analyst Ratings

This is a summary of recent ratings for Hawkins and International Flavors & Fragrances, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hawkins	0	2	3	0	2.60
International Flavors & Fragrances	2	4	13	0	2.58

Hawkins presently has a consensus price target of $162.50, indicating a potential downside of 2.58%. International Flavors & Fragrances has a consensus price target of $87.57, indicating a potential upside of 46.96%. Given International Flavors & Fragrances’ higher probable upside, analysts plainly believe International Flavors & Fragrances is more favorable than Hawkins.

Profitability

This table compares Hawkins and International Flavors & Fragrances’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hawkins	8.37%	18.35%	10.73%
International Flavors & Fragrances	-3.48%	7.95%	3.97%

Valuation and Earnings

This table compares Hawkins and International Flavors & Fragrances”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hawkins	$974.43 million	3.57	$84.35 million	$4.06	41.08
International Flavors & Fragrances	$11.48 billion	1.33	$243.00 million	($1.55)	-38.45

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

Dividends

Hawkins pays an annual dividend of $0.76 per share and has a dividend yield of 0.5%. International Flavors & Fragrances pays an annual dividend of $1.60 per share and has a dividend yield of 2.7%. Hawkins pays out 18.7% of its earnings in the form of a dividend. International Flavors & Fragrances pays out -103.2% 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. Hawkins has raised its dividend for 20 consecutive years. International Flavors & Fragrances is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

69.7% of Hawkins shares are held by institutional investors. Comparatively, 96.0% of International Flavors & Fragrances shares are held by institutional investors. 4.1% of Hawkins shares are held by company insiders. Comparatively, 0.2% of International Flavors & Fragrances shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

Hawkins has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, International Flavors & Fragrances has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500.

Summary

Hawkins beats International Flavors & Fragrances on 9 of the 17 factors compared between the two stocks.

About Hawkins

Hawkins, Inc. operates as a specialty chemical and ingredients company in the United States. It operates through three segments: Industrial, Water Treatment, and Health and Nutrition. The Industrial segment offers industrial chemicals, products, and services to agriculture, chemical processing, electronics, energy, food, pharmaceutical, and plating industries. This segment manufactures sodium hypochlorite and agricultural products, as well as various food-grade and pharmaceutical products, such as liquid phosphates, lactates, other blended products, and agricultural products; and receives, stores, and distributes various chemicals comprising liquid caustic soda, sulfuric acid, hydrochloric acid, urea, phosphoric acid, aqua ammonia, and potassium hydroxide. It also repackages water treatment chemicals and bulk industrial chemicals; and performs custom blending of chemicals. The Water Treatment segment provides chemicals, products, equipment, services, and solutions for potable water, municipal and industrial wastewater, industrial process water, non-residential swimming pool water, and agriculture water. The Health and Nutrition segment offers 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. Its products portfolio includes minerals, vitamins and amino acids, excipients, joint products, botanicals and herbs, sweeteners, and enzymes. Hawkins, Inc. was founded in 1938 and is headquartered in Roseville, Minnesota.

About International Flavors & Fragrances

International Flavors & Fragrances, Inc. engages in the manufacture and supply of flavors and fragrances used in the food, beverage, personal care, and household products industries. It operates through the following segments: Nourish, Health & Biosciences, Scent and Pharma Solutions. The Nourish segment consists of legacy Taste segment combined with N&B’s Food & Beverage division and the food protection business of N&B’s Health & Biosciences division. The Health & Biosciences business consists of a biotechnology-driven portfolio of enzymes, food cultures, probiotics and specialty ingredients for food, home and personal care, and health and wellness applications. The Scent business creates fragrance compounds, fragrance ingredients and cosmetic ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products. The Pharma Solutions business produces a vast portfolio including cellulosics and seaweed-based pharma excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling. The company was founded in 1833 and is headquartered in New York, NY.