Reasons to Add Hexcel (HXL) to Your Portfolio Right Now
Hexcel Corp. HXL develops, manufactures and distributes lightweight, high-performance structural materials to the commercial aerospace, space and defense, and industrial markets. With a well-diverse product range, inorganic growth incentives and a solid solvency position, it boasts strong long-term growth.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a solid investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for HXL’s 2023 earnings per share is pegged at $1.92. The bottom-line estimates have moved up 2.1% in the past 60 days.
The Zacks Consensus Estimate for current year sales stands at $1.80 billion, indicating year-over-year growth of 14.2%.
Hexcel’s trailing four-quarter earnings surprise is 16.14%, on average.
Debt Position
The total debt-to-capital of HXL was 32.24% as of Jun 30, 2023, better than 50.91% registered by the industry. It indicates that the company is using less debt than its peers, which is a positive sign.
Hexcel’s current ratio of 2.93 is better than industry’s average of 1.53. This implies that the company has sufficient financial capability to pay its short-term debt obligations.
Improving Air Traffic to Boost Growth
Hexcel’s commercial aerospace sales witnessed a 15% year-over-year improvement in the second quarter of 2023. Sales from the other commercial aerospace business unit, which includes business jets and regional aircraft, increased 13% year over year. Growth in both these units can be attributed to improving air passenger traffic witnessed across the globe in the past few months.
The International Air Transport Association stated in its latest economic outlook that domestic travel in key markets globally is now, on average, 5.3% higher than the 2019 levels. This bodes well for HXL’s future revenue growth from the commercial aerospace industry.
Return on Equity (ROE)
ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. Hexcel’s ROE is currently pegged at 9.40%, better than the industry’s average of 6.93%, which indicates that the company is utilizing its funds more efficiently than its peers.
Price Performance
In the past year, HXL’s shares have rallied 30.3% compared with the industry’s 15% increase.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks in the same industry are AAR Corp. AIR, Transdigm Group Inc. TDG and CurtissWright Corp. CW, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for AIR’s 2023 sales indicates year-over-year growth of 10.9%. It delivered an average earnings surprise of 5.81% in the past four quarters.
TDG boasts a long-term (three- to five-year) earnings growth rate of 25.3%. The Zacks Consensus Estimate for 2023 sales indicates year-over-year growth of 21.1%.
The Zacks Consensus Estimate for CW’s 2023 sales indicates year-over-year growth of 8.1%. It delivered an average earnings surprise of 4.08% in the past four quarters.
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AAR Corp. (AIR) : Free Stock Analysis Report
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Hexcel Corporation (HXL) : Free Stock Analysis Report
Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
