Hexcel Corp (HXL -2.03%) stock tumbled 11.8% through 10:20 a.m. ET Thursday after reporting earnings last night.
Heading into the company's Q3 report, analysts predicted the company, which manufactures carbon fiber composite materials and even entire airplane parts, would earn $0.49 per share on $501.8 million in sales. Hexcel beat the earnings forecast by a penny, earning $0.50 per share, but its sales came up short at $496.4 million.
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Hexcel Q3 earnings
Sales "missed estimates," but Hexcel still grew its sales 8.8%. Commercial aerospace sales soared 20.5% while defense sales headed the other way, declining 8.7% after Hexcel divested one "non-core Austrian-based industrial business" and closed another, in the U.K.
Offsetting the revenue hit, Hexcel improved its gross profit margin by 140 basis points, earning more on the sales it did make. Net profit per share nearly doubled year over year.
HXL Hexcel
NYSE · As of 4:00 PM ET 10/23/26
What's next for Hexcel stock
All things considered, these seem pretty good results. So why are investors selling Hexcel stock?
Guidance is probably the answer. As StreetInsider.com points out, Hexcel's forecast of $2.30 to $2.40 per share in non-GAAP diluted earnings per share this year implies a fair chance Hexcel will miss analyst forecasts for Hexcel to earn "$2.40," period. Management similarly forecast full-year sales between $2.025 billion and $2.125 billion -- so about $2.075 billion at the midpoint, which is also below analyst forecasts.
Granted, these are the same numbers Hexcel was guiding toward before reporting earnings this week. (Hexcel hasn't changed its forecast at all.) Problem is, Hexcel stock currently costs more than 33 times its earnings forecast. Investors were probably hoping the company would raise the forecast a bit, and thus lower its P/E, making the stock a bit cheaper to buy.
That didn't happen, and so now investors are punishing Hexcel stock.
