Hexcel Corporation Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Last week, you might have seen that Hexcel Corporation (NYSE:HXL) released its annual result to the market. The early response was not positive, with shares down 6.0% to US$66.96 in the past week. Statutory earnings per share fell badly short of expectations, coming in at US$1.24, some 36% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$1.8b. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Hexcel
Taking into account the latest results, the consensus forecast from Hexcel's 14 analysts is for revenues of US$2.00b in 2024. This reflects a meaningful 12% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 87% to US$2.36. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.03b and earnings per share (EPS) of US$2.57 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$77.72, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Hexcel analyst has a price target of US$99.00 per share, while the most pessimistic values it at US$63.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Hexcel is forecast to grow faster in the future than it has in the past, with revenues expected to display 12% annualised growth until the end of 2024. If achieved, this would be a much better result than the 9.0% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.6% annually. Not only are Hexcel's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hexcel. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$77.72, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Hexcel analysts - going out to 2026, and you can see them free on our platform here.
You can also view our analysis of Hexcel's balance sheet, and whether we think Hexcel is carrying too much debt, for free on our platform here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
