HXL

Hexcel is a leading maker of advanced carbon-fiber composites and structural materials, with deep content on commercial aerospace platforms (Airbus and Boeing) plus defense and industrial. It is a high-quality franchise positioned to benefit as the airframers ramp narrow- and wide-body production toward record rates. But FY2025 was a soft year: revenue was flat at $1.89B (-0.5%), gross profit fell 7.4%, operating income declined 7.8% to $172M, and net income dropped 17.2% to $109M, compressing gross margin to 23.0% and net margin to 5.8% (ROE 8.7%). Operating cash flow fell 20.5% to $231M.

Management leaned hard into buybacks, repurchasing $454M of stock (up 80.1%) and cutting the share count 6.5%, while also growing the dividend 9.3%. That capital return was partly debt-funded: long-term debt jumped 41.7% to $993M, stockholders' equity fell 18.1% to $1.25B, and cash dropped 43.4% to $71M, pushing leverage to 1.16x liabilities/equity. Buying back stock at a 40x multiple while earnings decline and debt rises is an aggressive choice that bears watching.