Aerospace and defense company Hexcel (NYSE: HXL) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 8% year on year to $529.3 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $2.08 billion at the midpoint. Its non-GAAP profit of $0.66 per share was 14.3% above analysts’ consensus estimates.

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Chairman, CEO and President Tom Gentile said, “Rising build rates at our commercial aerospace customers drove strong sales growth this quarter. Sales growth was particularly strong for both the Airbus A350 and Boeing 787 programs, with quarterly sales for these two platforms reaching their highest levels since before the pandemic. The increase in total sales generated meaningful operating leverage that contributed to solid earnings for the quarter with adjusted EPS of $0.66 per share.”

Company Overview

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.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Hexcel grew its sales at a solid 10.3% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. 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.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Commercial aerospace and Space & defense, which are 65.5% and 34.5% of revenue. Over the last two years, Hexcel’s Commercial aerospace revenue (customers like Airbus, Boeing) averaged 3.7% year-on-year growth while its Space & defense revenue (government customers) averaged 19.4% growth.

This quarter, Hexcel grew its revenue by 8% year on year, and its $529.3 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 10% over the next 12 months, an improvement versus the last two years. This projection is commendable and implies its newer products and services will catalyze better top-line performance.

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Operating Margin

Hexcel has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.4%.

Analyzing the trend in its profitability, Hexcel’s operating margin rose by 2.1 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Hexcel generated an operating margin profit margin of 13.7%, up 7.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales 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.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Hexcel’s EPS grew at an unimpressive 7.6% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 3.4% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Hexcel’s earnings to better understand the drivers of its performance. A two-year view shows that Hexcel has repurchased its stock, shrinking its share count by 8.1%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q2, Hexcel reported adjusted EPS of $0.66, up from $0.50 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Hexcel’s full-year EPS to grow 22.1% from $2.14 to $2.61.

Key Takeaways from Hexcel’s Q2 Results

It was great to see Hexcel’s full-year EPS guidance top analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 1.1% to $104.50 immediately following the results.

So should you invest in Hexcel right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).