What Happened?
Shares of aerospace and defense company Hexcel (NYSE: HXL) jumped 7.4% in the afternoon session after its fourth-quarter results beat Wall Street's expectations, overshadowing a weaker-than-anticipated forecast for the full year.
The advanced composites manufacturer posted revenue of $491.3 million, up 3.7% year-on-year, and adjusted earnings of $0.52 per share, with both figures topping analyst estimates. This strong quarterly performance appeared to resonate more with investors than the company's outlook. For the upcoming full year, Hexcel's revenue guidance of $2.05 billion and its adjusted earnings per share guidance of $2.20 both fell short of Wall Street's consensus. Despite the cautious forecast, the positive surprise from the quarter's performance was enough to send the shares higher.
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What Is The Market Telling Us
Hexcel’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 15.2% on the news that its third-quarter 2025 earnings report presented a mixed picture that investors ultimately viewed in a positive light.
The company's revenue of $456.2 million beat Wall Street's expectations, and it generated a robust free cash flow margin of 21.2%, up significantly from 16.1% in the same quarter last year. This strong cash generation appeared to outweigh concerns from an adjusted earnings per share of $0.37 that was in line with consensus estimates. In a note of caution, Hexcel also lowered its revenue and earnings guidance for the full year, but investors seemingly focused on the quarter's top-line strength and operational cash performance.
Hexcel is up 12.3% since the beginning of the year, and at $86.36 per share, has set a new 52-week high. Investors who bought $1,000 worth of Hexcel’s shares 5 years ago would now be looking at an investment worth $1,978.
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