Yahoo Finance Hexcel (HXL) Down 1.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Hexcel (HXL). Shares have lost about 1.1% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Hexcel Q1 Earnings Beat Estimates, Sales Rise Y/Y
Hexcel Corporation reported first-quarter 2022 adjusted earnings of 50 cents per share, which beat the Zacks Consensus Estimate of 39 cents by 28.2%. The bottom line improved massively from the year-ago earnings of 22 cents per share, highlighting solid growth of 127.3%.
In the quarter under review, the company posted GAAP earnings of 50 cents per share compared with the prior-year quarter’s earnings of 21 cents.
Total Sales
In the first quarter, net sales totaled $458 million, which beat the Zacks Consensus Estimate of $428 million by 6.8%. Also, the top line witnessed an improvement of 17.2% from the year-ago quarter’s $391 million.
Operational Update
Hexcel's gross margin in the first quarter was 27.9% compared with 22.2% in the prior-year period. This was driven by strong production volume leverage, a favorable sales mix and absorption and a beneficial foreign exchange impact.
SG&A expenses increased 13.6%. Meanwhile, research and technology expenses for the first quarter of 2022 rose 27.5% year over year.
HXL’s adjusted operating income was $63 million in the quarter compared with $31.1 million in the year-ago period.
Segmental Performance
Commercial Aerospace:Net sales increased 30% year over year to $284.5 million. The rise was driven by growth in the Airbus A350 and A320neo programs.
Space and Defense:Net sales rose 6.8% year over year to $126.2 million. The increase can be attributed to growth across several platforms globally, including fixed-wing aircraft and both military and civilian rotorcraft.
Industrial:Net sales decreased 12.1% year over year to $47 million. The decline was primarily due to lower wind energy sales.
Financial Details
As of Mar 31, 2023, cash and cash equivalents were $105.7 million compared with $112 million as of Dec 31, 2022.
The long-term debt totaled $768.5 million as of Mar 31, 2023, up from $723.3 million as of 2022-end.
During the three months ended Mar 31, 2023, the company’s cash outflow from operating activities was $23.4 million compared with $19 million in the prior-year period.
Hexcel’s adjusted free cash outflow for the three months ended Mar 31, 2023 was $41.5 million compared with $39.9 million in the prior-year period.
2023 Guidance
The company provided its 2023 financial guidance. Hexcel expects to generate sales in the band of $1.725-$1.825 billion. The Zacks Consensus Estimate for sales, pegged at $1.75 billion, is lower than the midpoint of the company's guidance range.
HXL expects to generate adjusted earnings per share in the range of $1.70-$1.90 in 2023. The Zacks Consensus Estimate for sales, pegged at $1.80 per share, is in line with the midpoint of the company's guidance range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Hexcel has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hexcel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Hexcel Corporation (HXL) : Free Stock Analysis Report
