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1. Company Snapshot

1.a. Company Description

Hexcel Corporation, together with its subsidiaries, develops, manufactures, and markets structural materials for use in commercial aerospace, space and defense, and industrial markets.It operates through two segments, Composite Materials and Engineered Products.The Composite Materials segment manufactures and markets carbon fibers, fabrics and specialty reinforcements, prepregs and other fiber-reinforced matrix materials, structural adhesives, honeycomb, molding compounds, tooling materials, polyurethane systems, and laminates that are used in military and commercial aircraft, wind turbine blades, recreational products, and other industrial applications, as well as in automotive, marine, and trains.


The Engineered Products segment manufactures and markets aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, rotorcraft blades, spars, and tip caps; and aircraft structural sub-components and semi-finished components used in rotorcraft blades, engine nacelles, and aircraft surfaces, such as flaps, wings, elevators, and fairings.The company sells its products directly through its managers, product managers, and sales personnel, as well as through independent distributors and manufacturer representatives in the Americas, Europe, the Asia Pacific, India, and Africa.Hexcel Corporation was founded in 1946 and is headquartered in Stamford, Connecticut.

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1.b. Last Insights on HXL

Hexcel Corporation's recent performance was positively driven by its Q3 2025 sales beat, with revenue reaching $456 million, relatively flat compared to Q3 2024. The company's divestiture of its industrial business in Austria and $350 million in accrued investments also contributed to its growth prospects. Despite a slight earnings miss, Hexcel's long-term outlook remains strong, driven by demand for advanced lightweight composites in the aerospace and defense sectors. EARNEST Partners' recent purchase of 418,477 shares also signals confidence in the company's growth prospects.

1.c. Company Highlights

2. Hexcel's Q3 2025 Earnings: A Strong Outlook Despite Near-term Headwinds

Hexcel Corporation reported revenue of $456 million in Q3 2025, with adjusted diluted EPS of $0.37, slightly below the estimated $0.38. The company's gross margin was 21.9%, down from 23.3% in Q3 2024 due to sales mix, tariffs, and inventory reduction actions. Adjusted operating income was $44.8 million or 9.8% of sales, down from $52.9 million or 11.6% of sales in the prior year period.

Publication Date: Oct -27

📋 Highlights
  • Q3 2025 Sales & EPS:: Generated $456 million in sales and adjusted diluted EPS of $0.37, with gross margin at 21.9% (down from 23.3% in Q3 2024).<br>
  • Segment Performance:: Commercial Aerospace sales declined 7.3% YoY due to Airbus A350 destocking, while Defense, Space & Other grew 11.7%.<br>
  • Share Repurchase Programs:: Authorized $600 million in new buybacks and executed a $350 million accelerated share repurchase (ASR), funded via revolver.<br>
  • Free Cash Flow Outlook:: Forecasts over $1 billion in cumulative free cash flow from 2025–2028, targeting mid-teens operating margins by 2026.<br>
  • Margin Pressures:: Adjusted operating margin fell to 9.8% of sales (from 11.6% in 2024) due to tariffs, inventory reductions, and weaker dollar.<br>

Segment Performance

The Commercial Aerospace segment saw a decline of 7.3% year-over-year on a constant currency basis, primarily due to destocking on the Airbus A350 program. In contrast, the Defense, Space, and Other segment sales increased 11.7% on a constant currency basis, driven by strong demand across fighter, helicopter, and space programs. Hexcel's CEO, Tom Gentile, emphasized the company's unique position in the market and industry-leading technology, highlighting the growing confidence in the company's sales outlook and future cash generation.

Outlook and Guidance

Hexcel has revised its 2025 guidance due to softer sales in the fourth quarter and the impact of lower production and tariffs. The company expects to exit 2025 strongly positioned for growth, with sales growth driving operating leverage and margin expansion in 2026 and beyond. Hexcel is forecasting to cumulatively generate more than $1 billion of free cash flow over the next 4-year period. Analysts estimate next year's revenue growth at 10.8%.

Valuation

Hexcel's current valuation metrics indicate a P/E Ratio of 84.43, P/B Ratio of 3.71, and EV/EBITDA of 30.79. The high P/E ratio suggests that the market has already priced in a significant amount of growth, which may limit the upside potential. However, the company's strong outlook and expected increase in free cash flow may justify the current valuation.

Capital Deployment Strategy

Hexcel's Board of Directors authorized an additional $600 million share repurchase program and announced an accelerated share repurchase program of $350 million. The company plans to use free cash flow to pay down debt and return cash to shareholders. With excess cash coming in, Hexcel believes the best investment in aerospace is itself, hence the investment through the Accelerated Share Repurchase (ASR) program.

3. NewsRoom

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This Aerospace Stock Is About to Take Off

Nov -24

Source: fool.com

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Head to Head Survey: Hexcel (NYSE:HXL) & Park Aerospace (NYSE:PKE)

Nov -23

Source: defenseworld.net

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AXQ Capital LP Acquires 8,269 Shares of Hexcel Corporation $HXL

Nov -22

Source: defenseworld.net

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Madison Small Cap Fund Q3 2025 Portfolio Activity

Nov -21

Source: seekingalpha.com

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Connor Clark & Lunn Investment Management Ltd. Sells 60,301 Shares of Hexcel Corporation $HXL

Nov -21

Source: defenseworld.net

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Hexcel: Improving Fundamentals Lead To Upward Trajectory

Nov -05

Source: seekingalpha.com

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A Once-in-a-Decade Opportunity to Buy This Aerospace Stock

Oct -31

Source: fool.com

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Hexcel Corporation $HXL Holdings Lifted by State of New Jersey Common Pension Fund D

Oct -30

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.35%)

6. Segments

Composite Materials

Expected Growth: 8%

Hexcel Corporation's Composite Materials segment growth is driven by increasing demand for lightweight materials in commercial aerospace, defense, and industrial markets. The company's innovative products, such as carbon fiber and honeycomb materials, are used in aircraft, wind turbines, and automotive applications, contributing to the segment's 8% growth.

Engineered Products

Expected Growth: 10%

Hexcel's Engineered Products segment growth is driven by increasing demand for lightweight composite materials in aerospace and industrial markets, driven by trends towards fuel efficiency, sustainability, and electrification. Additionally, the company's innovative products and strategic partnerships with major OEMs, such as Boeing and Airbus, contribute to its growth momentum.

7. Detailed Products

Carbon Fiber

High-performance carbon fibers used in aerospace, industrial, and recreational applications

Reinforcements

Woven and non-woven fabrics, tapes, and prepregs used in composite manufacturing

Structural Materials

Composite materials for aerospace, industrial, and recreational applications

Adhesives and Coatings

Epoxy and acrylic-based adhesives, coatings, and surface treatments for composite bonding and protection

Composite Tooling

Molds and tooling systems for composite part production

HexPly Prepregs

Pre-impregnated composite materials for aerospace, industrial, and recreational applications

8. Hexcel Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Hexcel Corporation is medium due to the availability of alternative materials and products in the market.

Bargaining Power Of Customers

The bargaining power of customers for Hexcel Corporation is low due to the company's strong brand reputation and the lack of price sensitivity among its customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Hexcel Corporation is medium due to the presence of multiple suppliers in the market, but the company's large scale of operations gives it some bargaining power.

Threat Of New Entrants

The threat of new entrants for Hexcel Corporation is low due to the high barriers to entry in the industry, including the need for significant capital investment and technical expertise.

Intensity Of Rivalry

The intensity of rivalry for Hexcel Corporation is high due to the presence of several established players in the market, leading to intense competition and pricing pressure.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.95%
Debt Cost 5.46%
Equity Weight 71.05%
Equity Cost 10.20%
WACC 8.83%
Leverage 40.75%

11. Quality Control: Hexcel Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Spirit AeroSystems

A-Score: 5.1/10

Value: 9.6

Growth: 1.1

Quality: 5.2

Yield: 0.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

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Leonardo DRS

A-Score: 4.6/10

Value: 2.0

Growth: 3.7

Quality: 6.2

Yield: 1.0

Momentum: 9.5

Volatility: 5.3

1-Year Total Return ->

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AeroVironment

A-Score: 4.5/10

Value: 4.4

Growth: 6.2

Quality: 4.7

Yield: 0.0

Momentum: 9.0

Volatility: 2.7

1-Year Total Return ->

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Rocket Lab USA

A-Score: 4.3/10

Value: 6.0

Growth: 4.6

Quality: 3.8

Yield: 0.0

Momentum: 10.0

Volatility: 1.3

1-Year Total Return ->

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Kratos Defense

A-Score: 4.2/10

Value: 2.2

Growth: 5.2

Quality: 4.3

Yield: 0.0

Momentum: 10.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Hexcel

A-Score: 4.1/10

Value: 1.5

Growth: 4.3

Quality: 4.3

Yield: 1.0

Momentum: 6.0

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

76.6$

Current Price

76.6$

Potential

-0.00%

Expected Cash-Flows