It has been about a month since the last earnings report for Hexcel (HXL Quick QuoteHXL - Free Report) . Shares have added about 10.8% 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 its most recent earnings report in order to get a better handle on the important drivers.

 Hexcel's Q1 Earnings Match Estimates, Sales Miss

Hexcel Corporation reported first-quarter 2024 adjusted earnings of 44 cents per share, which came in line with the Zacks Consensus Estimate.

In the first quarter, Hexcel posted GAAP earnings of 43 cents per share compared to the prior-year quarter’s earnings of 50 cents.

Total Sales

In the first quarter, the company’s net sales totaled $472.3 million, which missed the Zacks Consensus Estimate of $475 million by 0.6%. However, the top line witnessed an improvement of 3.2% from the year-ago quarter’s reported sales of $457.7 million.

The year-over-year improvement can be attributed to sales growth from Commercial Aerospace as well as Space & Defense markets.

Operational Update

Hexcel's gross margin in the first quarter was 25%, which declined from 27.9% in the prior-year period. The improvement in the gross margin was driven by favorable absorption and a favorable sales mix.

Selling, general and administrative (SG&A) expenses declined 3.5% year over year to $49 million in the first quarter. Meanwhile, research and technology expenses for the first quarter of 2024 rose 8.6% year over year to $15.1 million.

HXL’s adjusted operating income was $54.1 million in the quarter compared with $63 million in the year-ago period.

Market Performance

Commercial Aerospace: Net sales increased 5.2% year over year to $299.3 million, driven by increasing widebody sales.

Space and Defense: Net sales rose 10.2% year over year to $139.1 million. This market’s sales increase was led by fixed-wing aircraft programs, including the Lockheed F-35 and Airbus A400M, as well as classified programs.

Industrial: Net sales decreased 27.9% year over year to $33.9 million due to lower sales across all industrial sub-markets.

Financial Details

As of Mar 31, 2024, Hexcel’s cash and cash equivalents were $85.9 million compared with $227 million as of Dec 31, 2023.

The company’s long-term debt totaled $714.6 million as of Mar 31, 2024, up from $699.4 million as of 2023-end.

In the first quarter of 2024, HXL’s cash outflow operating activities was $7 million compared with cash outflow worth $23.4 million in the year-ago period.

Hexcel’s adjusted free cash outflow as of Mar 31, 2024 was $35.7 million compared with $41.5 million in the year-ago period.

Guidance

Hexcel reiterated its guidance for 2024. The company continues to expect to generate sales in the band of $1.925-$2.025 billion in 2024. The Zacks Consensus Estimate, pegged at $1.98 billion, is slightly higher than the midpoint of the company's guidance.

HXL still expects adjusted earnings per share in the range of $2.10-$2.30 in 2024. The Zacks Consensus Estimate, pegged at $2.22 per share, is higher than the company’s guided range.

Hexcel continues to expect to generate free cash flow of more than $200 million in 2024.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Hexcel has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Hexcel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.