Shares of Hawkins (HWKN) have been strong performers lately, with the stock up 14.4% over the past month. The stock hit a new 52-week high of $55.74 in the previous session. Hawkins has gained 44.1% since the start of the year compared to the 5.4% move for the Zacks Basic Materials sector and the 9% return for the Zacks Chemical - Specialty industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 2, 2023, Hawkins reported EPS of $1.12 versus consensus estimate of $0.61 while it beat the consensus revenue estimate by 6.39%.
For the current fiscal year, Hawkins is expected to post earnings of $3.40 per share on $940.24 million in revenues. This represents a 18.88% change in EPS on a 0.55% change in revenues.
Valuation Metrics
Hawkins may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Hawkins has a Value Score of B. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 16.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 15X. On a trailing cash flow basis, the stock currently trades at 13.4X versus its peer group's average of 9.5X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Hawkins currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Hawkins fits the bill. Thus, it seems as though Hawkins shares could have potential in the weeks and months to come.
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Hawkins, Inc. (HWKN) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
