HXL - Embedded Expectations Analysis - 2020 11 06
Hexcel Corporation (HXL:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 63.5x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may be concerned about declining sales, liquidity strength, and wind energy competitionSpecifically, management may lack confidence in their ability to grow sales and cash flow and may be concerned about their overhead savings run rate. In addition, they may be exaggerating liquidity strength and their digital customer relationships. Furthermore, management may lack confidence in their ability to compete in the wind energy market and maintain market leadership in advanced composite solutions. Moreover, they may have concerns about their idle carbon fiber production, the coronavirus impact on their markets, and their narrow-body aircraft backlog. Additionally, they may be exaggerating the strength of the Space & Defense market
Hexcel is a composites company with two reportable segments. 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 incorporated into several applications, including military and commercial aircraft, wind turbine blades, recreational products, transportation and other industrial applications. The Engineered Products segment manufactures and markets composite structures and precision machined honeycomb parts primarily for use in the aerospace industry.
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