Hexcel Corporation Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year
There's been a notable change in appetite for Hexcel Corporation (NYSE:HXL) shares in the week since its annual report, with the stock down 10% to US$49.30. It looks like a credible result overall - although revenues of US$1.3b were what the analysts expected, Hexcel surprised by delivering a (statutory) profit of US$0.19 per share, an impressive 25% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Hexcel's 14 analysts is for revenues of US$1.61b in 2022, which would reflect a substantial 21% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 549% to US$1.25. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.61b and earnings per share (EPS) of US$1.43 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
The consensus price target held steady at US$55.47, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Hexcel, with the most bullish analyst valuing it at US$68.00 and the most bearish at US$40.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Hexcel is forecast to grow faster in the future than it has in the past, with revenues expected to display 21% annualised growth until the end of 2022. If achieved, this would be a much better result than the 7.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.5% per year. Not only are Hexcel's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hexcel. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Hexcel. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Hexcel analysts - going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Hexcel (1 is concerning!) that you need to take into consideration.
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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.
