HXL changes
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- Price
- $78.01
- Discount category
- Below intrinsic value
- Next earnings
- 2027-01-27
- Next earnings is estimate
- Yes
- Company name
- Hexcel
- Sector
- Aerospace composites
- About
- Hexcel makes advanced lightweight composites: carbon fiber, specialty reinforcements, prepregs, honeycomb, resins, engineered core and composite structures. Most of its sales go to commercial aircraft, such as the Airbus A350 and A320 and the Boeing 787 and 737 MAX. Commercial Aerospace was 66% of sales in the first nine months of 2026, and Defense, Space & Other was 34%. Sales were $1.89 billion in 2025, down from a peak of $2.36 billion in 2019. Hexcel sold or closed some industrial businesses in Austria, Belgium, the United States and the United Kingdom in 2025 and 2026. Its headquarters is in Stamford, Connecticut.
- Thesis
- The market prices Hexcel for a slow ramp of aircraft production and for margins that are still below the levels before 2020. Sales were $1.89 billion in 2025, well under the $2.36 billion of 2019, and the adjusted operating margin was 11.0% in Q3 2026. Hexcel says that it can earn about $500 million of extra annual revenue when aircraft makers reach their production targets. But the timing depends on Airbus and Boeing, and defense and space programs were soft in 2026. Debt also rose after a $350 million share buyback in October 2025. For the gap to close, three things must be true. Commercial Aerospace sales must keep growing as A350, 787, A320 and 737 MAX rates rise. Higher volume must lift margins, as the gross margin rose to 25.4% in the first nine months of 2026 from 22.4%. Hexcel must bring leverage back to its target range by the end of 2026, as it expects, and meet its 2026 guidance. The Q4 2026 report and the 2027 guidance, expected in late January 2027, are the next test. If these checks pass, the gap can close slowly over several years of production increases. The main reason it may not close is new delays in aircraft production rates.
- Risks
- Sales depend on aircraft production rates at Airbus and Boeing. If supply problems or regulatory issues, such as those of the Boeing 737 MAX, slow the production increases, Hexcel's sales and margins grow more slowly. Total debt was $934.9 million at September 30, 2026, and net debt was $857.1 million. The debt rose after the $350 million accelerated share repurchase in October 2025. Hexcel plans to return to its target leverage by the end of 2026. Defense, Space & Other sales fell 8.7% in Q3 2026, partly because of softer F-35, international fighter, launcher and rocket motor programs. Lower defense or space demand can offset commercial growth. Raw material costs, tariffs and currency changes affect margins. Exchange rates lowered the operating margin by about 70 basis points in the first nine months of 2026.
- Balance sheet
- Cash: $78M Debt: $935M Net debt: $857M Undrawn credit line: $510M, to March 2031 Debt due within 12 months: $0.0M Last debt due: 2035 Hexcel funds itself with senior notes and a revolving credit facility. Total debt was $934.9 million at September 30, 2026, down from $993.0 million at December 31, 2025. It includes $400 million of 4.900% senior notes due 2031, $300 million of 5.875% senior notes due 2035 and $240 million under the revolving credit facility. Cash was $77.8 million, so net debt was $857.1 million. The undrawn credit is the unused part of the $750 million revolving credit facility, which matures on March 31, 2031. In May 2026, Hexcel redeemed all $400 million of its 3.950% notes due 2027, so no notes are due before 2031. Free cash flow was $102.5 million in the first nine months of 2026, and Hexcel expects more than $195 million for 2026. It expects leverage to return to its target range by the end of 2026. It did not buy back shares in Q3 2026. As of 2026-09-30.
- Checkpoints
- Jan 27, 2027 (estimate): Q4 2026 results and 2027 guidance. Pending. Watch: 2026 adjusted EPS within $2.30 to $2.40, free cash flow above $195 million, leverage back in the target range and 2027 guidance for higher margins pass; missed guidance or higher leverage fail. 2027 (estimate): Aircraft production rates. Pending. Watch: Higher A350, 787, A320 and 737 MAX rates that keep Commercial Aerospace sales growing pass; new production delays at Airbus or Boeing fail.
- Recent events
- 2026-10-21: Hexcel reported Q3 2026 results. Sales rose 8.8% to $496.4 million, and adjusted diluted EPS rose to $0.50 from $0.37. Commercial Aerospace sales rose 20.5%, and Defense, Space & Other sales fell 8.7%. Hexcel kept its 2026 guidance and raised its share repurchase authorization to $750 million from $381 million. 2026-07-29: Hexcel reported Q2 2026 results. Sales rose 8.0% to $529 million, and adjusted diluted EPS rose to $0.66 from $0.50. Hexcel raised its 2026 guidance to sales of $2.025 billion to $2.125 billion and adjusted EPS of $2.30 to $2.40. 2026-05-28: Hexcel redeemed all $400 million of its 3.950% senior notes due 2027. It used the money from $400 million of 4.900% senior notes due 2031, which it sold on April 30, 2026, and cash on hand. 2026-04-22: Hexcel reported Q1 2026 results. Sales rose 9.9% to $502 million, and adjusted diluted EPS rose to $0.59 from $0.37. Hexcel replaced its $750 million revolving credit facility with a new one that matures in 2031. 2026-03-10: Hexcel named James Coogan, the former Chief Financial Officer of Axcelis Technologies, as Chief Financial Officer from May 1, 2026. Earlier, on March 3, 2026, Hexcel signed a cooperation agreement with Vision One Fund and appointed Neal J. Keating to its board. 2026-01-28: Hexcel reported Q4 2025 results. Sales were $1.89 billion for 2025, adjusted diluted EPS was $1.76 and free cash flow was $157 million. Hexcel gave 2026 guidance of sales of $2.0 billion to $2.1 billion, adjusted EPS of $2.10 to $2.30 and free cash flow above $195 million.