Analyzing Cabot (NYSE:CBT) and Hawkins (NASDAQ:HWKN)

Hawkins (NASDAQ:HWKN) and Cabot (NYSE:CBT) are both mid-cap materials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, institutional ownership, profitability, valuation and earnings.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hawkins	$1.08 billion	2.57	$81.55 million	$3.86	34.50
Cabot	$3.71 billion	1.03	$331.00 million	$3.55	20.95

Cabot has higher revenue and earnings than Hawkins. Cabot 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 Cabot’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hawkins	7.29%	15.42%	8.22%
Cabot	5.23%	20.29%	9.01%

Volatility & Risk

Hawkins has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, Cabot has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Hawkins and Cabot, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hawkins	1	2	1	0	2.00
Cabot	1	4	2	0	2.14

Hawkins currently has a consensus target price of $170.50, indicating a potential upside of 28.03%. Cabot has a consensus target price of $87.80, indicating a potential upside of 18.06%. Given Hawkins’ higher possible upside, analysts plainly believe Hawkins is more favorable than Cabot.

Dividends

Hawkins pays an annual dividend of $0.80 per share and has a dividend yield of 0.6%. Cabot pays an annual dividend of $1.89 per share and has a dividend yield of 2.5%. Hawkins pays out 20.7% of its earnings in the form of a dividend. Cabot pays out 53.2% 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 Cabot has raised its dividend for 14 consecutive years.

Insider & Institutional Ownership

69.7% of Hawkins shares are held by institutional investors. Comparatively, 93.2% of Cabot shares are held by institutional investors. 3.7% of Hawkins shares are held by company insiders. Comparatively, 3.1% of Cabot shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Cabot beats Hawkins 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 Cabot

Cabot Corporation operates as a specialty chemicals and performance materials company. The company operates through two segments, Reinforcement Materials and Performance Chemicals. It offers reinforcing carbons that are used in tires as a rubber reinforcing agent and performance additive, as well as in industrial products, such as hoses, belts, extruded profiles, and molded goods; and engineered elastomer composites solutions. The company also provides specialty carbons for use in inks, coatings, plastics, adhesives, toners, batteries, and displays; conductive additives and fumed alumina used in lead acid and lithium-ion batteries for electric vehicles; fumed silica used in adhesives, sealants, cosmetics, batteries, inks, toners, silicone elastomers, coatings, polishing slurries, and pharmaceuticals; and fumed alumina for use in various products, including inkjet media, lighting, coatings, cosmetics, and polishing slurries. In addition, it offers aerogel, a hydrophobic, silica-based particle to use in various thermal insulation and specialty chemical applications; masterbatch and conductive compound products that are used in automotive, industrial, packaging, infrastructure, agriculture, consumer products, and electronics industries; and inkjet colorants for inkjet printing applications. The company sells its products through distributors and sales representatives in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.