Results: Hexcel Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts
There's been a notable change in appetite for Hexcel Corporation (NYSE:HXL) shares in the week since its full-year report, with the stock down 10% to US$49.30. Revenues were US$1.3b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.19, an impressive 25% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Hexcel
Taking into account the latest results, the consensus forecast from Hexcel's 14 analysts is for revenues of US$1.61b in 2022, which would reflect a huge 21% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 549% to US$1.25. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.61b and earnings per share (EPS) of US$1.43 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$55.47, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Hexcel, with the most bullish analyst valuing it at US$68.00 and the most bearish at US$40.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Hexcel's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 21% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 7.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.5% per year. So it looks like Hexcel is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hexcel. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$55.47, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Hexcel going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 3 warning signs for Hexcel (1 is significant!) that you need to be mindful of.
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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.
