A month has gone by since the last earnings report for Hexcel (HXL Quick QuoteHXL - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hexcel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Hexcel Q3 Earnings Beat Estimates, Sales Rise Y/Y

Hexcel reported third-quarter 2021 adjusted earnings of 13 cents per share, which exceeded the Zacks Consensus Estimate of 8 cents by 62.5%. The bottom line also improved from a loss of 29 cents per share incurred in the year-ago quarter.

In the quarter under review, the company posted GAAP earnings of 11 cents compared with the prior-year quarter’s figure of 12 cents.

Total Sales

Net sales totaled $333.8 million, which missed the Zacks Consensus Estimate of $353 million by 5.3%. However, the top line witnessed an improvement of 16.3% from the year-ago quarter’s $286.9 million.

Operational Update

Hexcel's gross margin for the third quarter was 19.8% compared with 4.7% in the prior-year period, driven by a favorable sales mix oriented toward carbon fiber combined with the benefits of prior cost reduction actions that reduced the overhead cost base.

Selling, general and administrative expenses rose 30.1%, whereas research and technology expenses for the third quarter of 2021 dropped 2.8% year over year.

The company’s adjusted operating income amounted to $23.6 million in the quarter against an adjusted operating loss of $21.8 million incurred in the year-ago period.

Segmental Performance

Commercial Aerospace: Net sales increased 29.8% year over year to $167.2 million. Strengthening narrowbody sales boosted this unit’s top-line performance.

Space and Defense: Net sales grew 1.5% year over year to $110.4 million. The improvement can be attributed to strength observed in F-35, CH-53K, civil helicopters in Europe and unmanned aerial vehicles in the United States.

Industrial: Net sales increased 14% year over year to $56.2 million, primarily driven by strong growth observed in automotive and recreation markets.

Financial Details

As of Sep 30, 2021, cash and cash equivalents were $105.8 million compared with $103.3 million as of Dec 31, 2020.

Long-term debt totaled $876.4 million as of Sep 30, 2021, down from $925.5 million as of 2020-end.

At the end of third-quarter 2021, cash generated from operating activities was $64.2 million compared with $157 million in the prior year.

Hexcel’s adjusted free cash outflow at the end of third-quarter 2021 was $49.2 million compared with $109.2 million at the end of the prior-year period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 27.41% due to these changes.

VGM Scores

At this time, Hexcel has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hexcel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.