Q3 Earnings Preview for Hexcel (NYSE:HXL)

in EARNINGS/INVESTING IDEAS by

Hexcel Corporation (NYSE:HXL) is scheduled to report Q3 earnings results after markets close for trading on October 19, 2020.

The company is expected to report earnings of $0.07/share on revenue of $359.4 million. The consensus earnings per share (EPS) of $0.07/share is based on a poll of 16 analysts and represents a decline in eps of −92.2% over the same quarter last year, when the company reported earnings of $0.90/share.

The revenue forecast of $359.4 million based on a poll of 14 analysts implies a year-over-year (YoY) decline in revenue of −37.2%. Last year the company reported $572.5 million in revenue for the quarter.

Expected to report EPS contraction of −92.2% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $359.43 $572.50 −37.2%
EPS $0.07 $0.90 −92.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Hexcel Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.22 $0.08 −62.9% Missed
Q1, 2020 $0.71 $0.64 −9.6% Missed
Q4, 2019 $0.84 $0.86 2.5% Beat
Q3, 2019 $0.88 $0.90 2.6% Beat
Q2, 2019 $0.89 $0.94 5.9% Beat
Q1, 2019 $0.78 $0.84 8.2% Beat
Q4, 2018 $0.80 $0.82 3.0% Beat
Q3, 2018 $0.78 $0.80 2.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −9.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 27, 2020 $45.65 $41.52 −9.0% Decline
April 20, 2020 $32.31 $28.57 −11.6% Decline
February 3, 2020 $74.22 $74.66 0.6% Increase
October 21, 2019 $76.17 $75.59 −0.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.00, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.00 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Hexcel Corporation is currently trading at $35.32/share, down −0.6% for the day. The company is trading at approximately 44.5% of its 52-week high of $80.57/share. The company’s stock price is down −14.9% since the last earnings report and down −5.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 42.40 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:HXL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 15.07 and a forward P/E multiple of 37.07.

Hexcel Corporation’s current share price also implies a price-to-book (P/B) multiple of 2.04. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $35.32
P/E Ratio 15.1x
P/E Ratio (Fwd) 37.1x
PEG Ratio −0.5
Total Debt / Total Capital 29.7%
Levered Free Cash Flow $262.3 million
EV / EBITDA 8.7x

Finbox

Hexcel Corporation is a mid-cap stock with a market capitalization of $2.967 billion and a total enterprise value of $3.975 billion. The company operates in the Industrials sector and the Aerospace & Defense industry.

Hexcel Corporation, together with its subsidiaries, develops, manufactures, and markets structural materials for use in commercial aerospace, space and defense, and industrial markets. It operates in two segments, Composite Materials and Engineered Products. The Composite Materials segment manufactures and markets carbon fibers, fabrics and specialty reinforcements, prepregs and other fiber-reinforced matrix materials, structural adhesives, honeycomb, molding compounds, tooling materials, polyurethane systems, and laminates that are used in military and commercial aircraft, wind turbine blades, recreational products, and other industrial applications, as well as in automotive, marine, and trains. The Engineered Products segment manufactures and markets aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, helicopter blades, spars, and tip caps; and aircraft structural sub-components and semi-finished components used in helicopter blades, engine nacelles, and aircraft surfaces, such as flaps, wings, elevators, and fairings. The company sells its products directly through its managers, product managers, and sales personnel, as well as through independent distributors and manufacturer representatives in the Americas, Europe, the Asia Pacific, India, and Africa. Hexcel Corporation was founded in 1946 and is headquartered in Stamford, Connecticut.

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