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Hexcel Corp HXL

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Morningstar’s Analysis

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We Think Hexcel Has Returned to Sustainable Growth as Supply Chain Destocking Is Now Mostly Complete

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

Narrow-moat Hexcel returned to growth in the third quarter as the firm laps an easy comparable quarter in 2020, and the supply chain destocking has largely completed on most major aircraft programs. Sales of $334 million were shy of FactSet consensus by 4.0%, but EPS of $0.13 beat consensus by 59.6%. We are increasing our fair value to $49.50 from $48 as we reduce our capital expenditures forecast to account for several years of low capital reinvestment requirements due to the general fungibility of aerospace-grade carbon fiber between narrowbody and widebody aircraft, though this was partially offset by a slightly lower revenue forecast.

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Company Profile

Business Description

Hexcel designs and manufactures high-performance composites, including carbon fibers, for use in commercial aerospace, defense, and other industrial markets. Generally, around 70% of revenue is from the commercial aerospace end market, 17% of revenue is from the defense end market and 13% of revenue is from other industrial end markets. The company operates under two segments: composite materials and engineered products.

281 Tresser Boulevard, Two Stamford Plaza, 16th Floor
Stamford, CT, 06901
T +1 203 969-0666
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 4,647