Hexcel Continues To Execute Well Through A Challenging Period Ahead Of A Widebody Production Ramp

Hexcel (NYSE:HXL) is one of those frustrating situations where I have a lot of regard for management and see significantly improving financials in the future, but where the share price today seems to already reflect those positives. I thought the same almost seven months ago, though, and that hasn’t kept the shares from rising about 15% since then, handily outperforming most of the company’s customer base and many other aircraft component suppliers.

Hexcel has done better than I expected on margins ahead of reacceleration in widebody production, but that outperformance doesn’t drive a big enough change in my model to fundamentally alter my valuation view. If you’re the type of investor who is less sensitive to valuation and more confident that the shares can see another run as widebody activity accelerates, there’s a case to be made for the shares. For me, though, I need a line of sight on better long-term financials or a lower entry price.

 

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Hexcel Continues To Execute Well Through A Challenging Period Ahead Of A Widebody Production Ramp