Financial Analysis: Loar (NYSE:LOAR) versus Hexcel (NYSE:HXL)

Loar (NYSE:LOAR) and Hexcel (NYSE:HXL) are both mid-cap aerospace companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Analyst Ratings

This is a summary of current recommendations for Loar and Hexcel, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Loar	0	1	4	1	3.00
Hexcel	1	11	3	0	2.13

Loar currently has a consensus target price of $92.00, suggesting a potential upside of 32.26%. Hexcel has a consensus target price of $82.17, suggesting a potential downside of 7.28%. Given Loar’s stronger consensus rating and higher possible upside, research analysts plainly believe Loar is more favorable than Hexcel.

Risk and Volatility

Loar has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, Hexcel has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Valuation & Earnings

This table compares Loar and Hexcel”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Loar	$496.28 million	13.12	$72.15 million	$0.75	92.75
Hexcel	$1.89 billion	3.55	$109.40 million	$1.38	64.22

Hexcel has higher revenue and earnings than Loar. Hexcel is trading at a lower price-to-earnings ratio than Loar, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

95.5% of Hexcel shares are owned by institutional investors. 22.6% of Loar shares are owned by company insiders. Comparatively, 1.4% of Hexcel shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Loar and Hexcel’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Loar	14.54%	7.54%	5.27%
Hexcel	5.78%	9.54%	5.08%

Summary

Loar beats Hexcel on 9 of the 15 factors compared between the two stocks.

About Loar

Loar Holdings Inc., through its subsidiaries, designs, manufactures, and markets aerospace and defense components for aircraft, and aerospace and defense systems in the United States and internationally. It offers products in various categories, which include airframe components, structural components, avionics, composites, braking system components, de-ice and ice protection, electro-mechanical, engineered materials, flight controls, fluid and motion controls, environmental, metal forming, molded components, and restraints and safety devices. The company also provides auto throttles, lap-belt airbags, two-and three-point seat belts, water purification systems, fire barriers, polyimide washers and bushings, latches, hold-open and tie rods, temperature and fluid sensors and switches, carbon and metallic brake discs, fluid and pneumatic-based ice protection, RAM air components, sealing solutions, actuation devices, and others. It primarily serves commercial, business jet and general aviation, and defense markets. Loar Holdings Inc. was founded in 2017 and is headquartered in White Plains, New York.

About Hexcel

Hexcel Corporation develops, manufactures, and markets carbon fibers, structural reinforcements, honeycomb structures, resins, and composite materials and parts for use in commercial aerospace, space and defense, and industrial applications. It operates through two segments, Composite Materials and Engineered Products. The Composite Materials segment manufactures and markets fabrics, multi-axials, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, structural adhesives, molding compounds, tooling materials, polyurethane systems, and laminates that are used in military and commercial aircraft, wind turbine blades, recreational products, and other industrial applications, as well as in automotive, marine, and rail transportation. The Engineered Products segment manufactures and markets aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, rotorcraft blades, spars, and tip caps; and aircraft structural sub-components and semi-finished components used in rotorcraft blades, engine nacelles, and aircraft surfaces, such as flaps, wings, elevators, and fairings; and RF interference control products for military and aerospace applications. This segment also provides interference control materials, structural composites, and services; dielectric absorber foams; magnetic absorbers; and thermoplastics for commercial and defense applications. The company sells its products directly through its managers, product managers, and sales personnel, as well as through independent distributors in the Americas, Europe, the Asia Pacific, India, and Africa. Hexcel Corporation was founded in 1946 and is headquartered in Stamford, Connecticut.