Here is what LRT Capital has to say about Hexcel Corporation in its Q2 2021 investor letter:
"Hexcel manufactures carbon fiber composite materials with the primary end markets being aerospace and defense. The company’s stock price was hit heavily last year due to the decline in the aerospace market, but the stock is making an impressive comeback this year as the outlook for travel and aerospace demand improves. The near-term demand for lightweight, high-performance carbon fiber composites is still uncertain, but the longer-term trend is clearly very strong. As airplane manufacturers look to improve the fuel efficiency and performance of their planes, the primary way of doing this is to reduce weight. The 787, 777X and A350 are just the most recent examples of planes from Boeing and Airbus that utilize an increasing amount of carbon fiber materials in their construction.
Hexcel reported a profit of $0.08 per share for Q2 2021, while revenue declined 15% year-over-year. Just as is the case with Marriott, we do not view these results as meaningful or indicative of a long-term trend, but rather a once in a century aberration due to the Covid-19 pandemic. Once Covid-19 recedes, we expect the demand for more fuel-efficient planes to return rather quickly, powering the demand for the company’s light weight carbon composites.
Shares are +12.23% year-to-date and +39.75% over the past twelve months."