Aerospace and defense company Hexcel (NYSE: HXL) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 9.9% year on year to $501.5 million. On the other hand, the company’s full-year revenue guidance of $2.05 billion at the midpoint came in 0.7% below analysts’ estimates. Its non-GAAP profit of $0.59 per share was 35.6% above analysts’ consensus estimates.

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Chairman, CEO and President Tom Gentile said, “The Hexcel team delivered strong first quarter results on rising commercial aerospace build rates supported by the normalization of channel inventory. Our first quarter sales increased ten percent and earnings per share grew at a significantly higher rate, underscoring the benefit from significant operating leverage as we grow back into existing capacity. Our priorities remain centered on execution and operational discipline as we support the rate ramps of our customers.”

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

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Hexcel’s 8.8% annualized revenue growth over the last five years was decent. Its growth was slightly above 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 3.7% 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.

Hexcel also breaks out the revenue for its most important segments, Commercial aerospace and Space & defense, which are 66.3% and 33.7% of revenue. Over the last two years, Hexcel’s Commercial aerospace revenue (customers like Airbus, Boeing) was flat while its Space & defense revenue (government customers) averaged 24.7% year-on-year growth.

This quarter, Hexcel reported year-on-year revenue growth of 9.9%, and its $501.5 million of revenue exceeded Wall Street’s estimates by 3.4%.

Looking ahead, sell-side analysts expect revenue to grow 9% over the next 12 months, an improvement versus the last two years. This projection is above the sector average 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%.

Looking at the trend in its profitability, Hexcel’s operating margin rose by 3 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 11.5%, up 1.8 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 encouraging and shows it’s at a critical moment in its life.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Hexcel’s EPS grew at an unimpressive 6.4% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 3.7% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Hexcel’s earnings can give us a better understanding of its performance. A two-year view shows that Hexcel has repurchased its stock, shrinking its share count by 9.6%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q1, Hexcel reported adjusted EPS of $0.59, up from $0.37 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 of $1.98 to grow 21.4%.

Key Takeaways from Hexcel’s Q1 Results

It was good to see Hexcel beat analysts’ EPS expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EPS guidance slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 6.5% to $92.90 immediately after reporting.

Hexcel may have had a good quarter, but does that mean you should invest 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).