Critical Analysis: H. B. Fuller (NYSE:FUL) and Hawkins (NASDAQ:HWKN)

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

Risk & Volatility

Hawkins has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, H. B. Fuller has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500.

Profitability

This table compares Hawkins and H. B. Fuller’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hawkins	7.75%	16.85%	8.93%
H. B. Fuller	4.38%	12.21%	4.55%

Valuation and Earnings

This table compares Hawkins and H. B. Fuller”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	2.96	$84.35 million	$3.95	34.92
H. B. Fuller	$3.47 billion	0.82	$151.97 million	$3.00	17.33

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

Insider and Institutional Ownership

69.7% of Hawkins shares are held by institutional investors. Comparatively, 95.9% of H. B. Fuller shares are held by institutional investors. 4.1% of Hawkins shares are held by insiders. Comparatively, 1.8% of H. B. Fuller shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Hawkins pays an annual dividend of $0.76 per share and has a dividend yield of 0.6%. H. B. Fuller pays an annual dividend of $0.94 per share and has a dividend yield of 1.8%. Hawkins pays out 19.2% of its earnings in the form of a dividend. H. B. Fuller pays out 31.3% 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 H. B. Fuller has raised its dividend for 57 consecutive years. H. B. Fuller is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Hawkins and H. B. Fuller, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hawkins	0	3	2	0	2.40
H. B. Fuller	1	2	3	0	2.33

Hawkins currently has a consensus price target of $162.50, suggesting a potential upside of 17.80%. H. B. Fuller has a consensus price target of $67.75, suggesting a potential upside of 30.30%. Given H. B. Fuller’s higher possible upside, analysts plainly believe H. B. Fuller is more favorable than Hawkins.

Summary

Hawkins beats H. B. Fuller 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 H. B. Fuller

H.B. Fuller Company, together with its subsidiaries, formulates, manufactures, and markets adhesives, sealants, coatings, polymers, tapes, encapsulants, additives, and other specialty chemical products. It operates through three segments: Hygiene, Health and Consumable Adhesives; Engineering Adhesives; and Construction Adhesives. The Hygiene, Health and Consumable Adhesives segment produces and supplies specialty industrial adhesives, such as thermoplastic, thermoset, reactive, water-based, and solvent-based products for applications in various markets, including packaging, converting, nonwoven and hygiene, and health and beauty. The Engineering Adhesives segment produces and supplies high performance industrial adhesives comprising reactive, light cure, two-part liquids, polyurethane, silicone, film, and fast cure products to the durable assembly, performance wood and textile, transportation, electronics, clean energy, aerospace and defense, appliance, heavy machinery, and insulating glass markets. The Construction Adhesives segment provides products used for tile setting, commercial roofing, heating, ventilation, and air conditioning and insulation applications, as well as caulks and sealants for the consumer market and professional trade. The company sells its products directly to customers, as well as through distributors and retailers in the Americas, Europe, India, the Middle East, Africa, and the Asia Pacific. H.B. Fuller Company was founded in 1887 and is headquartered in Saint Paul, Minnesota.