While the S&P 500 is up 14% since March 2026, Hexcel (currently trading at $88.04 per share) has lagged behind, posting a return of 8.6%. This might have investors contemplating their next move.
Given the relatively weaker price action, is now a good time to buy HXL? Or are investors better off allocating their money elsewhere?
Why Does HXL Stock Spark Debate?
Founded shortly after World War II by a group of engineers from UC Berkley, Hexcel (NYSE: HXL) manufactures lightweight composite materials primarily for the aerospace and defense sectors.
Two Positive Attributes:
1. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Hexcel’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
2. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Hexcel’s margin expanded by 7.9 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Hexcel’s free cash flow margin for the trailing 12 months was 12.9%.
One Reason to Be Careful:
Lackluster Revenue Growth
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Hexcel’s recent performance shows its demand has slowed as its annualized revenue growth of 3.4% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
Final Judgment
Hexcel’s merits more than compensate for its flaws. With its shares lagging the market recently, the stock trades at 34.9× forward P/E (or $88.04 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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