Author: admin

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE.

Hexcel (HXL) has drawn investor attention after recent trading left the stock with mixed short term performance, including a 2.1% one day decline, alongside stronger returns over the month and past 3 months.

See our latest analysis for Hexcel.

At a share price of $82.81, Hexcel’s recent 12.1% 1 month share price return and 16.0% 3 month share price return suggest improving momentum. The 28.5% 1 year total shareholder return points to a stronger longer term picture.

If Hexcel’s recent move has you thinking about where else capital might work in the sector, it could be a good time to scan aerospace and defense stocks for other aerospace and defense names on your radar.

So with Hexcel trading at $82.81, showing a 14.6% intrinsic discount, and sitting just shy of its analyst price target, should you view this as a genuine entry point, or has the market already priced in the growth story?

Hexcel’s most followed narrative puts fair value at $76.86, which sits below the current $82.81 share price, and that gap is what the story tries to explain.

Regular long term supply agreements and the ability to negotiate price increases and pass throughs in contract renewals as inflation raises input costs, despite some headwinds from legacy contracts, should gradually support better pricing, net margins, and EPS over time, especially as volumes recover and more contracts come up for renewal.

Read the complete narrative.

Curious what earnings path and margin rebuild need to hold for that fair value to stack up? The narrative leans heavily on compounding profit growth and a future valuation multiple that assumes investors stay comfortable with those projections.

Result: Fair Value of $76.86 (OVERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, you still need to weigh the risk that key customers adjust production plans or that long term contracts continue to squeeze margins if costs remain elevated.

Find out about the key risks to this Hexcel narrative.

While the popular narrative sees Hexcel as about 8% overvalued at a fair value of $76.86, our DCF model tells a different story. On that framework, Hexcel at $82.81 is trading roughly 15% below an estimated fair value of $96.92, which points to a potential mismatch between narrative caution and cash flow math. Which lens do you trust more when the story and the spreadsheet diverge?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Hexcel for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 868 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If you see the numbers differently or simply want to stress test your own assumptions, you can quickly build a custom view and Do it your way

A great starting point for your Hexcel research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

If Hexcel has sharpened your thinking, do not stop here. A wider watchlist can help you spot opportunities you might otherwise miss entirely.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include HXL.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com