Hawkins (NASDAQ:HWKN) versus Linde (NASDAQ:LIN) Critical Review

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Hawkins and Linde, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hawkins	1	1	3	0	2.40
Linde	0	2	6	2	3.00

Hawkins currently has a consensus price target of $162.50, suggesting a potential upside of 26.92%. Linde has a consensus price target of $508.83, suggesting a potential upside of 19.26%. Given Hawkins’ higher probable upside, analysts clearly believe Hawkins is more favorable than Linde.

Risk and Volatility

Hawkins has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Linde has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500.

Dividends

Hawkins pays an annual dividend of $0.76 per share and has a dividend yield of 0.6%. Linde pays an annual dividend of $6.00 per share and has a dividend yield of 1.4%. Hawkins pays out 19.1% of its earnings in the form of a dividend. Linde pays out 40.2% 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 and Linde has raised its dividend for 5 consecutive years.

Institutional and Insider Ownership

69.7% of Hawkins shares are held by institutional investors. Comparatively, 82.8% of Linde shares are held by institutional investors. 4.1% of Hawkins shares are held by company insiders. Comparatively, 0.7% of Linde shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Hawkins and Linde”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hawkins	$1.05 billion	2.56	$84.35 million	$3.98	32.17
Linde	$33.50 billion	5.95	$6.57 billion	$14.93	28.58

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hawkins	7.95%	17.79%	10.11%
Linde	20.20%	19.09%	9.19%

Summary

Linde beats Hawkins on 12 of the 18 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 Linde

Linde plc operates as an industrial gas company in the Americas, Europe, the Middle East, Africa, Asia, and South Pacific. It offers atmospheric gases, including oxygen, nitrogen, argon, and rare gases; and process gases, such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. The company also designs and constructs turnkey process plants for third-party customers, as well as for the gas businesses in various locations, such as air separation, hydrogen, synthesis, olefin, and natural gas plants. It serves a range of industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The company was founded in 1879 and is based in Woking, the United Kingdom.