The Future of Aerospace - Hexcel Corp. (NYSE: HXL)


This is a company that is looking promising for the short-to-mid-term future. Consider buying shares in this company after checking it out thoroughly.

dreamliner 787

About Hexcel Corp. (HXL)

According to Yahoo, Hexcel Corporation, together with its subsidiaries, engages in the development, manufacture, and marketing of composites for use in the commercial aerospace, space and defense, and industrial applications. It operates in two segments, Composite Materials and Engineered Products.

The Composite Materials segment manufactures and markets carbon fibers, fabrics and specialty reinforcements, prepregs, structural adhesives, honeycomb, composite panels, molding compounds, polyurethane systems, and laminates. These products have applications in military and commercial aircraft, wind turbine blades, recreational products, and other industrial applications.

The Engineered Products segment manufactures and markets composite structures and precision machined honeycomb parts for use in the aerospace industry. The company’s products are also used in various end applications, including space launch vehicles and satellites, automotive, bikes, skis, and various other industrial applications.

Hexcel Corporation sells and markets its products directly, as well as through independent distributors and manufacturer representatives. It sells its products in the United States, France, Austria, the United Kingdom, and internationally. The company was founded in 1946 and is based in Stamford, Connecticut.

What Are Composites?

Composites are the most important materials to be adapted for aerospace since the use of aluminum in the 1920s. The use of these miracle materials is sweeping all sectors of aerospace. Broadly defined, composite materials represent the combination of inherently dissimilar materials, usually involving carbon, to form a strengthened combination.

The idea behind composites is as old as Biblical times, when masons mixed straw with mud to form stronger bricks – except with today’s space age materials, the resulting composite yields truly remarkable results in weight reduction, strength and flexibility.

Composites offer significant performance benefits, including reduced overall weight, improved fuel burn, and better resistance against corrosion and damage. Composites help reduce pollution through greater fuel economy, an important consideration in light of increasingly strict environmental regulations imposed on aviation. They also allow greater aircraft speed, opening up new long-range routes for passengers – and new competitive opportunities for hard-pressed airlines.

Who Uses Composites?

Worldwide aerospace composites manufacturing is a roughly $10 billion-a-year industry. InterFlight Global, an aerospace consulting firm based in Miami, says that the aerospace composite market is on track to reach $50 billion annually by 2018.

Aircraft manufacturing giant The Boeing Company (NYSE: BA) has embraced these futuristic materials for its commercial aircraft – and its competitors, such as European-based Airbus, are being forced to follow suit.

New composite aircraft, such as Boeing’s Dreamliner 787, are revolutionizing the aerospace industry. The 787 is an aircraft that is a leader in the industry. Boeing has risked a great deal on this high-tech aircraft; the Dreamliner's maiden flight, originally scheduled for August 2007, finally occurred last December, and the 787 has racked up a record amount of orders for any new plane in history.

Why Hexcel Corp. (HXL)?

Stamford, Conn. based Hexcel Corp. (NYSE: HXL) is the largest U.S. producer of carbon fiber and by far the number one producer of aerospace composite materials. The $1.54 billion company is Boeing’s chief composite supplier, and seems to be the surest investment play on the growing demand for composites in aerospace.

Hexcel graph

After Monday's close, May 26th, 2010, the company posted better-than-expected results for the first quarter. Excluding certain items, Hexcel said earnings in the most recent three-month period totaled $0.15 a share, down from $0.24 a year earlier, but better than the $0.11 per share that analysts were expecting.

When Hexcel's results are put into the context of the severe worldwide slump that commercial aerospace experienced in 2009 and the beginning of 2010, the company more than held its own. Hexcel’s net sales during the first quarter fell 14% to $263.0 million, but commercial aerospace sales fell just 1.2%, to $152 million.

Airbus and Boeing related sales were up over 10%, led by Boeing and its composite-intensive 787. Significantly, total sales to Boeing and Airbus were over 15% above the average of the final three quarters of 2009. Revenues attributed to new composite-built aircraft from Boeing and Airbus represented more than 15% of the company’s commercial aerospace sales; demand from these two manufacturing giants will serve as a crucial driver of the company’s future growth.


Hexcel’s shares are at a 52-week high, but long-range fundamentals still predict that this is a stock worth considering. Hexcel dominates the composite space and is consequently the best positioned to ride the enormous shift in aerospace toward composites.

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