In This Article:
While Hexcel Corporation (NYSE:HXL) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 16% in the last quarter. But at least the stock is up over the last five years. In that time, it is up 75%, which isn't bad, but is below the market return of 107%. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 26% drop, in the last year.
Since it's been a strong week for Hexcel shareholders, let's have a look at trend of the longer term fundamentals.
We've discovered 2 warning signs about Hexcel. View them for free.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During five years of share price growth, Hexcel actually saw its EPS drop 14% per year.
Essentially, it doesn't seem likely that investors are focused on EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
The modest 1.3% dividend yield is unlikely to be propping up the share price. We are not particularly impressed by the annual compound revenue growth of 2.4% over five years. So it seems one might have to take closer look at earnings and revenue trends to see how they might influence the share price.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Hexcel is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Hexcel stock, you should check out this free report showing analyst consensus estimates for future profits.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Hexcel, it has a TSR of 81% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!