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Hexcel (HXL) Up 6.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Hexcel (HXL - Free Report) . Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hexcel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hexcel Q4 Earnings Beat Estimates, Sales Rise Y/Y
Hexcel Corporation reported fourth-quarter 2022 adjusted earnings of 40 cents per share, which beat the Zacks Consensus Estimate of 31 cents by 29%.
The bottom line improved massively from the year-ago earnings of 16 cents per share, implying solid growth of 150%.
In the quarter under review, the company posted GAAP earnings of 43 cents per share compared with the prior-year quarter’s earnings of 22 cents.
For 2022, the company reported adjusted earnings of $1.28 per share, which improved a solid 374.1% from the year-ago figure of 27 cents.
Total Sales
In the fourth quarter, net sales totaled $429.4 million, which beat the Zacks Consensus Estimate of $404 million by 6.7%. Also, the top line witnessed an improvement of 19.2% from the year-ago quarter’s $360.3 million.
For 2022, the company recorded revenues worth $1,578 million, up 19.1% from 2021’s reported figure.
Operational Update
Hexcel's gross margin in the fourth quarter was 23.1% compared with 19.2% in the prior-year period, driven by higher sales.
Selling, general and administrative expenses increased 26.3%, whereas research and technology expenses for the fourth quarter of 2022 rose 3.4% year over year.
HXL’s adjusted operating income was $46.3 million in the quarter compared with $25.2 million in the year-ago period.
Segmental Performance
Commercial Aerospace: Net sales increased 28.3% year over year to $256.2 million, driven by growth in all the major platforms, including the Airbus A350 and A320neo, and the Boeing 787 and 737 MAX.
Space and Defense: Net sales increased 19.5% year over year to $126.5 million. The increase can be attributed to global strength witnessed across the entire sector.
Industrial: Net sales decreased 14.6% year over year to $46.7 million primarily due to lower wind energy sales.
Financial Details
As of Dec 31, 2022, cash and cash equivalents were $112 million compared with $127.7 million as of Dec 31, 2021.
The long-term debt totaled $723.3 million as of Dec 31, 2022, down from $822.4 million as of 2021-end.
In 2022, the company’s cash flow from operating activities was $173.1 million compared with $151.7 million in the prior-year period.
Hexcel’s adjusted free cash flow for 2022 was $96.8 million compared with $123.8 million in the prior-year period.
2023 Guidance
The company provided its 2023 financial guidance.
Hexcel expects to generate sales of $1.725-$1.825 billion. The Zacks Consensus Estimate for sales, pegged at $1.72 billion, is almost in line with the lower end of the company's guidance range.
The company expects to generate adjusted earnings per share of $1.70-$1.90 in 2023. The Zacks Consensus Estimate for sales, pegged at $1.72 per share, is lower than the mid-point of the company's guidance range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 21.21% due to these changes.
VGM Scores
At this time, Hexcel has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hexcel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Hexcel (HXL) Up 6.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Hexcel (HXL - Free Report) . Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hexcel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hexcel Q4 Earnings Beat Estimates, Sales Rise Y/Y
Hexcel Corporation reported fourth-quarter 2022 adjusted earnings of 40 cents per share, which beat the Zacks Consensus Estimate of 31 cents by 29%.
The bottom line improved massively from the year-ago earnings of 16 cents per share, implying solid growth of 150%.
In the quarter under review, the company posted GAAP earnings of 43 cents per share compared with the prior-year quarter’s earnings of 22 cents.
For 2022, the company reported adjusted earnings of $1.28 per share, which improved a solid 374.1% from the year-ago figure of 27 cents.
Total Sales
In the fourth quarter, net sales totaled $429.4 million, which beat the Zacks Consensus Estimate of $404 million by 6.7%. Also, the top line witnessed an improvement of 19.2% from the year-ago quarter’s $360.3 million.
For 2022, the company recorded revenues worth $1,578 million, up 19.1% from 2021’s reported figure.
Operational Update
Hexcel's gross margin in the fourth quarter was 23.1% compared with 19.2% in the prior-year period, driven by higher sales.
Selling, general and administrative expenses increased 26.3%, whereas research and technology expenses for the fourth quarter of 2022 rose 3.4% year over year.
HXL’s adjusted operating income was $46.3 million in the quarter compared with $25.2 million in the year-ago period.
Segmental Performance
Commercial Aerospace: Net sales increased 28.3% year over year to $256.2 million, driven by growth in all the major platforms, including the Airbus A350 and A320neo, and the Boeing 787 and 737 MAX.
Space and Defense: Net sales increased 19.5% year over year to $126.5 million. The increase can be attributed to global strength witnessed across the entire sector.
Industrial: Net sales decreased 14.6% year over year to $46.7 million primarily due to lower wind energy sales.
Financial Details
As of Dec 31, 2022, cash and cash equivalents were $112 million compared with $127.7 million as of Dec 31, 2021.
The long-term debt totaled $723.3 million as of Dec 31, 2022, down from $822.4 million as of 2021-end.
In 2022, the company’s cash flow from operating activities was $173.1 million compared with $151.7 million in the prior-year period.
Hexcel’s adjusted free cash flow for 2022 was $96.8 million compared with $123.8 million in the prior-year period.
2023 Guidance
The company provided its 2023 financial guidance.
Hexcel expects to generate sales of $1.725-$1.825 billion. The Zacks Consensus Estimate for sales, pegged at $1.72 billion, is almost in line with the lower end of the company's guidance range.
The company expects to generate adjusted earnings per share of $1.70-$1.90 in 2023. The Zacks Consensus Estimate for sales, pegged at $1.72 per share, is lower than the mid-point of the company's guidance range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 21.21% due to these changes.
VGM Scores
At this time, Hexcel has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hexcel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.