Hexcel vs. Loar: Which Industrials Stock Is a Better Buy in 2026?

Investors often weigh the stability of established industry leaders against the high-growth potential of newer challengers. Today, we compare the long-standing Hexcel (NYSE:HXL) against the rapidly expanding Loar (NYSE:LOAR) to see which fits your portfolio.

Hexcel leads the market in advanced composite materials used to make aircraft lighter and more fuel-efficient. Loar focuses on designing and manufacturing niche components for both commercial and military aviation. Both companies benefit from the aerospace recovery, yet they offer different risk and reward profiles for those investing in commercial aviation or military technology.

The case for Hexcel

Hexcel supplies advanced lightweight composite materials, including carbon fiber reinforcements and resins, to the global aerospace market. These products are essential for modern aircraft because they reduce weight and improve fuel efficiency. Roughly 39% of net sales in FY 2025 came from Airbus, while Boeing and its subcontractors accounted for nearly 13%. Customer concentration like this adds a layer of risk to the business. The company remains a key player among defense stocks due to its participation in military aviation programs.

In FY 2025, revenue reached nearly $1.9 billion, which was approximately 0.5% lower than the prior year. Despite this slight decline in sales, the company reported net income of roughly $109.4 million. This resulted in a net margin of close to 5.8%, down from the 6.9% achieved in the previous fiscal year.

As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 0.8x. This ratio measures how much a company finances its operations through debt, rather than through shareholder capital, and includes both short- and long-term debt. The current ratio, which compares short-term assets to short-term liabilities, is roughly 2.3x. In FY 2025, Hexcel generated nearly $307.2 million in free cash flow, the cash remaining after capital expenditures.

The case for Loar

Loar focuses on designing and manufacturing niche aerospace and defense components for a variety of end markets. These include commercial aviation, business jets, and military platforms. Unlike some competitors, the company maintains a more diversified customer base, with no single customer accounting for more than 12% of net sales in 2025. Customer concentration like this adds a layer of risk to the business. This strategy helps insulate the business from the production issues of any one aircraft manufacturer.

During FY 2025, the company reported revenue of nearly $496.3 million. This represented a substantial increase of approximately 23.2% compared to the prior year. Net income for the period was roughly $72.1 million, resulting in a net margin of nearly 14.5%, a significant improvement over the 5.5% net margin recorded in the previous fiscal year.

As of the December 2025 balance sheet, the debt-to-equity ratio was 0.0x, indicating the company has no significant debt relative to its equity. The current ratio was approximately 4.7x, suggesting a very strong ability to cover short-term financial obligations. During FY 2025, Loar generated nearly $99.3 million in free cash flow. This metric measures the cash a company generates after subtracting the cost of physical assets, such as equipment.

Risk profile comparison

Hexcel faces significant risks due to its heavy reliance on two primary customers. If either Airbus or Boeing experiences program delays or production slowdowns, Hexcel's revenue would likely suffer. Furthermore, the company is vulnerable to supply disruptions because it depends on limited-source raw materials. It must also navigate strict government regulations and the constant threat of cybersecurity breaches targeting its proprietary data.

Loar carries different risks, particularly related to its acquisition-based growth strategy. Integrating new businesses can be difficult and may lead to unforeseen expenses or the loss of key personnel. The company also competes against larger entities such as Honeywell International or TransDigm Group for market share. Because many of its government contracts are fixed-price, Loar faces the risk of shrinking net margins if raw material costs increase unexpectedly.

Valuation comparison

Hexcel offers a much lower entry point for investors based on its sales and earnings multiples, while Loar carries a significant growth premium.

Sector benchmark uses the SPDR XLI sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

While both stocks are leaders in their respective niches, they are vastly different types of companies to hold. If you are looking for a stock that is the dominant force in its industry but probably doesn’t offer multibagger returns anytime soon, Hexcel, with its No. 1 position in aerospace composites, is an excellent steady-Eddie investment. On the other hand, Loar is more of a swing-for-the-fences type of investment, offering multibagger potential thanks to its smaller size and a strong history of successful M&A.

Both companies trade at premium forward P/E ratios, but for different reasons. Hexcel gets its lofty valuation thanks to its No. 1 position, wide moat, and tough-to-disrupt operations. Meanwhile, Loar has grown its sales by 38% annually since 2012 and boasts high-and-rising margins. In this sense, I’d say both stocks deserve their premium. However, I think Loar stands out because of its higher growth potential.

Though Loar “competes” with TransDigm in the aerospace components and parts industry, it mostly does so through the M&A process rather than individual parts. They both love to add new parts through tuck-in acquisitions, but TransDigm’s much larger size leaves them uninterested in some tiny M&A deals that wouldn’t move the needle for them -- but do for Loar. In a sense, Loar is borrowing from TransDigm’s playback to try to generate similarly impressive results as the latter has delivered over the years.

That said, while I would rather own Loar, Hexcel could prove an interesting stock over the next decade, as Boeing and Airbus have massive backlogs to fill, which should keep the company busy. At the same time, Hexcel also makes composites for satellites, rocket motors, and other space applications, making it an interesting investment as the space industry booms.

Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing, Honeywell International, and TransDigm Group. The Motley Fool recommends Hexcel. The Motley Fool has a disclosure policy.