Key Takeaways
- Hexcel shares fell 10% today after third-quarter sales of $496 million missed the $502 million consensus and the company only reaffirmed its 2026 guidance.
- Lam Research, Nokia and TTM Technologies also sank today after results that topped estimates but came with outlooks that only held or matched expectations.
- Hexcel’s margin fell from the first half because it is hiring ahead of demand, and it is still up from a year ago.
- To hit the middle of its sales guidance, Hexcel needs its biggest quarter of the year in the fourth quarter, so that’s the number to watch.
Hexcel (HXL) shares sank 10% today. The aerospace supplier’s third-quarter sales came up about $6 million short of Wall Street’s $502 million consensus.
Sales still rose 9% to $496 million, and adjusted EPS of $0.50 matched estimates. But after Wednesday’s close Hexcel only reaffirmed its 2026 guidance, and Chairman and CEO Tom Gentile pointed to “temporary softness in a few fighter and space programs.”
Other companies fell hard today for similar reasons. Lam Research (LRCX) fell [10%] after guiding its December-quarter revenue roughly in line with estimates. Nokia (NOK) dropped [11%] after only keeping its full-year outlook. And TTM Technologies (TTMI) plunged [28%] despite record revenue, up 60%, because its fourth-quarter outlook only matched estimates.
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Hiring ahead of demand
Commercial aerospace sales jumped 21%, with Airbus’s A350 and A320 and Boeing’s 787 and MAX all growing. Defense, Space & Other fell 9%. Most of that drop came from a business Hexcel sold and another it closed. Weaker sales for the F-35, an international fighter program, and launchers and rocket motors added to it.
Hexcel’s adjusted operating margin fell to 11.0% in the third quarter, from about 13.7% in the first half. Gentile blamed summer seasonality and “near-term cost headwinds from accelerated hiring and training to support the strong demand signals we are receiving across our business for Q4 and 2027.”
But 11.0% is still up from 9.8% a year ago. And the 12.8% adjusted margin so far this year beats every full year from 2021 to 2025…
…so I’d call this quarter’s dip a short-term drag.
The fourth quarter has to deliver
To hit the middle of its sales guidance, Hexcel needs about $550 million in the fourth quarter. That’s more than any quarter so far this year. And Wall Street’s $2.40 EPS estimate for 2026 sits at the top of Hexcel’s $2.30 to $2.40 range…
That 2026 estimate may slip toward the middle of the range. But nothing in this release argues for cutting the $3.16 analysts expect for 2027.
The board also nearly doubled the buyback authorization, to $750 million. And the stock started today at 31x forward earnings, below its five-year average of 35x…
…and today’s drop takes it closer to 28x.
My take: a $6 million sales miss and a margin dip from hiring for more demand don’t justify wiping out more than $700 million of market value.
Of course, if the fighter and space softness turns out to be more than “temporary,” or the fourth quarter comes in light, the guidance is at risk. Hexcel’s next report, early next year, will tell.
So what is Hexcel stock actually worth?
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