Hexcel (HXL) Down 9.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Hexcel (HXL). Shares have lost about 9.4% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Hexcel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Hexcel's Q4 Earnings Surpass Estimates, Revenues Improve Y/YHexcel Corporation reported fourth-quarter 2024 adjusted earnings of 52 cents per share, which improved 20.9% from the year-ago quarter’s figure of 43 cents. The bottom line also surpassed the Zacks Consensus Estimate of 51 cents by 2%. The bottom line also surpassed the Zacks Consensus Estimate of 46 cents by 2.2%.The company reported GAAP earnings of 7 cents per share, which surpassed the year-ago quarter’s loss of 21 cents per share.HXL reported 2024 adjusted earnings of $2.03 per share, which were higher than the year-ago figure of $1.81. The year-over-year bottom-line improvement can be attributed to higher net sales and net income compared with the prior-year quarter.HXL’s Total SalesThe company’s net sales totaled $473.8 million, which beat the Zacks Consensus Estimate of $471 million by 0.6%. The top line also witnessed an improvement of 3.6% from the year-ago quarter’s figure of $457.5 million.The company reported sales of $1.90 billion in 2024, which were higher than $1.79 billion reported in 2023. The year-over-year improvement can be attributed to sales growth in the Commercial Aerospace and Space & Defense markets.Hexcel’s Operational UpdateHexcel's gross margin was 25%, which increased 250 basis points from the prior-year quarter. The improvement can be attributed to favorable cost leverage driven by higher sales.Selling, general and administrative (SG&A) expenses increased 14.3% year over year to $47.9 million. Meanwhile, research and technology expenses rose 11.6% year over year to $13.5 million.HXL’s adjusted operating income was $8.9 million compared with $47.6 million in the year-ago period.Contribution From Different MarketsCommercial Aerospace: Net sales increased 4% year over year to $278.3 million, driven by sales growth from Airbus A320neo and Boeing 787 programs. This market contributed 58.7% to total revenues in the quarter.Space and Defense: Net sales increased 7.2% year over year to $163.3 million, driven by sales growth from Sikorsky CH-53K and Lockheed F-35 programs as well as domestic and international space sales. This market contributed 34.5% to total revenues in the quarter.Industrial: Net sales decreased 14.6% year over year to $32.2 million due to a decline witnessed in sub-markets. This market contributed 6.8% to total revenues in the quarter.HXL’s Financial DetailsAs of Dec. 31, 2024, Hexcel’s cash and cash equivalents were $125.4 million compared with $227 million as of Dec. 31, 2023.The company’s long-term debt totaled $700.6 million as of Dec. 31, 2024, up from $699.4 million as of 2023-end.HXL’s cash flow from operating activities was $289.9 million compared with $257.1 million in the prior year.Hexcel’s adjusted free cash flow as of Dec. 31, 2024, was $202.9 million compared with $148.9 million in the year-ago period.Hexcel’s GuidanceHexcel expects to generate sales in the range of $1.95-$2.05 billion. The Zacks Consensus Estimate is pegged at $2 billion, which lies at the midpoint of the company’s sales guidance.HXL also expects its adjusted earnings per share to be in the range of $2.05-$2.25. The Zacks Consensus Estimate is currently pegged at $2.34 per share, which is above the company’s guided range.Hexcel expects to generate a free cash flow of more than $220 million in 2025. It also expects capital expenditure to be less than $100 million.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision.VGM ScoresAt this time, Hexcel has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hexcel has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hexcel Corporation (HXL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks