EARNEST Partners Buys the Dip in Hexcel Stock
Key Points
The investment adviser added 418,477 shares of Hexcel at an estimated trade value of $22 million, based on second quarter's average price.
Hexcel now accounts for 1.3% of the fund's 13F assets, valued at $290.4 million as of June 30, 2025.
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What happened
According to a recent SEC filing dated August 15, 2025, EARNEST Partners LLC increased its position in Hexcel Corporation (NYSE:HXL) by 418,477 shares during the quarter. The estimated transaction value, based on the quarterly average share price, was $22.13 million.
The fund's total holdings in Hexcel were 5,140,542 shares as of June 30, 2025, with a reported market value of $290.39 million as of June 30, 2025.
What else to know
The transaction lifted Hexcel to 1.3% of EARNEST Partners LLC's 13F assets.
Top holdings after the filing:
- CBRE Group: $496.38 million (2.24% of AUM)
- Reinsurance Group of America: $476.32 million (2.15% of AUM)
- GATX Corp: $473.92 million (2.14% of AUM)
- Houlihan Lokey: $444.92 million (2.01% of AUM)
- Moog: $393.05 million (1.77% of AUM)
Hexcel shares were priced at $61.57 as of August 18, 2025, with a one-year negative alpha of 17.0 percentage points versus the S&P 500.
The stock's dividend yield was 1.07% as of August 18, 2025; Forward P/E (FY1 2026) was 25.11; EV/EBITDA was 28.82; and shares were priced at 13.3% below the 52-week high as of August 18, 2025.
Company Overview
| Metric | $4.9 billion |
|---|---|
| Revenue (TTM) | $1.88 billion |
| Net Income (TTM) | $88 million |
| Dividend Yield | 1.07% |
Company Snapshot
- Manufactures advanced structural materials, including carbon fibers, prepregs, adhesives, and engineered aircraft components for aerospace, defense, and industrial applications.
- Generates revenue through direct sales and distribution of composite materials and engineered products worldwide.
- Primary customers include commercial aerospace manufacturers, defense contractors, and industrial firms requiring high-performance materials.
Hexcel supplies advanced composites and engineered products, serving the aerospace, defense, and industrial sectors. The company operates globally, providing high-performance materials for aerospace and industrial applications. Hexcel has a diversified product portfolio and a broad customer base.
Foolish take
EARNEST Partners' acquisition of stock in the advanced composite materials company, Hexcel, looks like a smart move. The company has struggled over the last few years as its two key customers, Airbus, and to a lesser extent, Boeing (and both their subcontractors), have fallen behind their aircraft production plans. That's problematic for Hexcel because, unlike many other aerospace suppliers, it can't fall back on aftermarket demand when original equipment manufacturing (the aircraft) demand is weak.
It's even more problematic considering that Hexcel geared up for more volume demand than it received, to the detriment of its margins. That said, the backlog at Airbus and Boeing isn't disappearing. In fact, according to their last earnings reports, Airbus has a backlog of 8,754 commercial airplanes, and Boeing's commercial airplane backlog is over 5,900.
Provided there isn't a recession in the travel industry, those orders are likely to get filled– good news for Hexcel. Still, it's not the whole story, because the company benefits not only from increased aircraft volume but also from an ongoing trend towards newer planes having an ever-increasing amount of advanced composites in airplanes.
Investors like EARNEST will need to be patient, not least because clearing the supply chain crisis in the aerospace industry is taking longer than many expected. Still, it's only a matter of time, and buying on a dip in Hexcel's share price makes sense.
Glossary
13F: A quarterly SEC filing by institutional investment managers disclosing their equity holdings.
AUM (Assets Under Management): The total market value of assets an investment firm manages on behalf of clients.
Alpha: A measure of an investment's performance relative to a benchmark, often indicating outperformance or underperformance.
Dividend yield: Annual dividends per share divided by the share price, expressed as a percentage.
Forward P/E: Price-to-earnings ratio using forecasted earnings for the next fiscal year.
EV/EBITDA: Enterprise value divided by earnings before interest, taxes, depreciation, and amortization; a valuation metric.
Prepreg:Reinforced fibers pre-impregnated with resin, used in advanced composite manufacturing.
Composite materials: Engineered materials made from two or more constituent substances with different physical or chemical properties.
TTM: The 12-month period ending with the most recent quarterly report.
Quarterly average price: The average share price of a security over a specific quarter.
Market value: The total dollar value of a company's outstanding shares, calculated using the current share price.
Engineered products: Items designed and manufactured to meet specific technical requirements, often for industrial or aerospace use.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Houlihan Lokey. The Motley Fool recommends Hexcel. The Motley Fool has a disclosure policy.
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