The decrease in Hexcel's share price occurred in 2024.
In 2024, Boeing's misfortunes significantly affected Hexcel, one of its largest suppliers, leading to a disappointing year for the aerospace materials manufacturer. Despite the S&P 500 posting a 23% rise, Hexcel shares plummeted by 15%. The aerospace supplier relies heavily on Boeing, which had experienced its own turbulence, struggling with manufacturing and engineering setbacks.
Boeing's woes, coupled with the limited customer base for Hexcel's materials, forced the company to revise its financial expectations for 2024 and withdraw its long-term growth forecast. With Boeing's recovery timeline uncertain, investors abandoned Hexcel's shares that year.
Yet, Hexcel managed to distribute capital back to shareholders, decreasing its share count by 4% in the previous year and 16% over the past decade. The company also offers a modest dividend, yielding approximately 1%. Given the demand for lightweight composite materials in the aviation industry, particularly with Airbus projecting 42,000 new deliveries in the next two decades, there's potential for Hexcel to recover.
However, the key lies in overcoming Boeing's production hurdles and ensuring demand materializes swiftly. Hexcel's ability to defeat these challenges and capitalize on the expanding aerospace materials market could pave the way for impressive growth in the future.
As for the optimistic outlook, Q3 2024 saw a 8.8% sales increase, with commercial aerospace sales surging 17.5% due to Airbus and Boeing 787 programs. Analysts predict Q4 2024 revenue growth of 4.25% and EPS growth of 20.85%, with a full-year sales growth of 6.5% and EPS growth of 11%. The aerospace materials market is set to reach USD 20.6 billion in 2025, driven by technological advancements and increasing air travel demand.
In summary, while Hexcel faces short-term challenges, long-term prospects remain positive due to the growing demand for composite materials and its position as a leading supplier. However, navigating Boeing's production issues and capitalizing on the expanding market is crucial for future growth.
Hexcel's financial struggles were largely due to the challenges faced by its largest client, Boeing, leading to a decrease in share prices despite the S&P 500's significant rise. To cope with Boeing's issues, Hexcel reduced its share count over the past decade, distributing capital back to shareholders. Despite the potential for growth in the demand for lightweight composite materials in the aviation industry, Hexcel's future success relies on overcoming Boeing's production hurdles and capitalizing on the market expansion.
The aerospace materials market, projected to reach USD 20.6 billion in 2025, offers a chance for Hexcel's recovery, given its position as a leading supplier. However, normalizing its financial expectations and ensuring a swift demand materialization are key for successful growth. As Boeing works towards recovery, Hexcel's investing in metals and durability could play a significant role in its long-term finance sustainability.
