Why Hexcel Stock Crashed After Earnings
Hexcel's earnings weren't half bad, but investors are upset over guidance.
Hexcel Corp's stock experienced a significant drop of 11.8% after reporting its third-quarter earnings, falling short of earnings forecasts and sales expectations. Despite earning $0.50 per share, which surpassed predictions, Hexcel's sales totaled $496.4 million, missing market estimates. However, the company managed to increase its sales by 8.8%.
Commercial aerospace sales surged by 20.5%, while defense sales declined by 8.7% after Hexcel's divestiture of a non-core Austrian-based industrial business and closure of another in the U.K. Despite these improvements, Hexcel's net profit per share nearly doubled compared to the previous year. The disappointing results, particularly the guidance for future earnings and sales, led to investors selling Hexcel stock.
The company's current valuation, which is more than 33 times its earnings forecast, prompted investors to hope for a forecast increase, thereby reducing its P/E ratio and making the stock more affordable. Such expectations were not met, causing the stock's price to plummet.
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