A month has gone by since the last earnings report for Hexcel (HXL). Shares have lost about 0.6% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Hexcel due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Hexcel Corporation before we dive into how investors and analysts have reacted as of late.
Hexcel's Q3 Earnings Miss Estimates, Sales Beat, '25 EPS View Lowered
Hexcel Corporation reported third-quarter 2025 adjusted earnings of 37 cents per share, which declined 21.3% from the year-ago quarter’s figure of 47 cents. The bottom line also missed the Zacks Consensus Estimate of 38 cents by 2.6%.
The company reported GAAP earnings of 26 cents per share, which declined 46.9% from the year-ago quarter’s figure of 49 cents.
The year-over-year bottom-line decline can be attributed to lower net sales and operating income compared with the prior-year quarter.
HXL’s Total Sales
In the third quarter, the company’s net sales totaled $456.2 million, which beat the Zacks Consensus Estimate of $449 million by 1.6%. However, the top line fell 0.1% from the year-ago quarter’s reported sales of $456.5 million.
The year-over-year decline can be attributed to lower sales from the Commercial Aerospace market.
Hexcel’s Operational Update
Hexcel's gross margin in the third quarter was 21.9%, which contracted 140 basis points from the prior-year quarter. The decline in the gross margin can be attributed to inventory reduction actions and a sales mix that led to unfavorable cost leverage.
Selling, general and administrative (SG&A) expenses increased 3.3% year over year to $41.1 million in the third quarter. Research and technology expenses for the third quarter of 2025 rose 1.4% year over year to $14 million.
HXL’s adjusted operating income was $44.8 million in the quarter compared with $52.9 million in the year-ago period.
HXL’s Contribution From Different Markets
Commercial Aerospace: Net sales decreased 7.3% year over year to $274.2 million due to the result of inventory destocking, primarily on the Airbus A350 but also the Boeing 787.
Space and Defense: Net sales rose 13.3% year over year to $182 million. This year-over-year growth was broad-based, including fighters, rotorcraft and space.
HXL’s Financial Details
As of Sept. 30, 2025, Hexcel’s cash and cash equivalents were $90.5 million compared with $125.4 million as of Dec. 31, 2024.
The company’s long-term debt totaled $757.9 million as of Sept. 30, 2025, up from $700.6 million as of 2024-end.
During the first nine months of 2025, HXL’s cash provided by operating activities was $105 million compared with the cash inflow of $127.3 million in the year-ago period.
Hexcel’s adjusted free cash flow as of Sept. 30, 2025 was $49.9 million compared with adjusted free cash flow of $58.9 million in the year-ago period.
Hexcel’s 2025 Guidance
Hexcel now expects to generate sales of around $1.88 billion compared to the previous band of $1.88-$1.95 billion in 2025. The Zacks Consensus Estimate, pegged at $1.90 billion, lies above the company's guidance.
HXL now expects its adjusted earnings per share in the range of $1.70-$1.80 in 2025 compared to the previous band of $1.85-$2.05. The Zacks Consensus Estimate, pegged at $1.88, lies above the company's guidance range.
Hexcel expects to generate free cash flow of nearly $190 million in 2025. Its capital expenditure outlook remains less than $90 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -15.67% due to these changes.
VGM Scores
At this time, Hexcel has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.
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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hexcel has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Hexcel Corporation (HXL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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