HWKN

We rate HAWKINS INC (HWKN) as a Reduce with a composite score of 40.1/100 at a current price of $146.50. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (61th percentile) and stability (56th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (22th percentile) and value (26th percentile) tempers our overall conviction. We assign a No Moat rating (39/100), Low uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

HAWKINS INC holds a top-quartile position (#0 of 50) within the Wholesale Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 40.1/100 places it at rank #3531 in our full 7,333-stock universe. At $3.1B in market capitalization, HAWKINS INC is a mid-cap player in the Wholesale Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (61th percentile), revenue contraction of -1% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 23% (+0.3pp vs sector) narrow to operating margins of 11% (+7.9pp vs sector) and net margins of 7.6%, yielding a gross-to-net conversion rate of 34%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $146.50, HAWKINS INC is trading at a premium to fundamental value. Our value factor score of 26/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 37.8x (a 98% premium to the sector median of 19.1x), EV/EBITDA of 28.0x (at a premium), P/B of 5.9x, P/S of 2.9x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to HAWKINS INC. The company exhibits strong financial stability with a beta of 0.80, and a stability factor in the 56th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 56th percentile with quality at the 37th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

We identify limited risk mitigants at this time, which contributes to our low uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate HAWKINS INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 15.6%, and the balance sheet is managed within acceptable parameters (D/E: 51%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; HAWKINS INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.50% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, HAWKINS INC receives a Reduce rating with a composite score of 40.1/100 (rank #3531 of 7,333). Our quantitative framework assigns a No Moat (39/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 40/100.

Our analysis does not support a constructive view on HAWKINS INC at this time. The combination of limited competitive advantages, low uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.