Hexcel (HXL) versus Elbit Systems (ESLT) Critical Review
Hexcel (NYSE: HXL) and Elbit Systems (NASDAQ:ESLT) are both mid-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.
Risk & Volatility
Hexcel has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, Elbit Systems has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.
This table compares Hexcel and Elbit Systems’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hexcel||$2.00 billion||2.76||$249.80 million||$2.77||22.26|
|Elbit Systems||$3.26 billion||1.78||$236.90 million||$5.54||24.51|
Hexcel has higher earnings, but lower revenue than Elbit Systems. Hexcel is trading at a lower price-to-earnings ratio than Elbit Systems, indicating that it is currently the more affordable of the two stocks.
Hexcel pays an annual dividend of $0.50 per share and has a dividend yield of 0.8%. Elbit Systems pays an annual dividend of $1.76 per share and has a dividend yield of 1.3%. Hexcel pays out 18.1% of its earnings in the form of a dividend. Elbit Systems pays out 31.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hexcel has increased its dividend for 2 consecutive years.
This table compares Hexcel and Elbit Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings and recommmendations for Hexcel and Elbit Systems, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Hexcel presently has a consensus target price of $63.00, indicating a potential upside of 2.16%. Elbit Systems has a consensus target price of $110.00, indicating a potential downside of 18.99%. Given Hexcel’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Hexcel is more favorable than Elbit Systems.
Insider and Institutional Ownership
96.5% of Hexcel shares are owned by institutional investors. Comparatively, 11.1% of Elbit Systems shares are owned by institutional investors. 2.1% of Hexcel shares are owned by insiders. Comparatively, 0.8% of Elbit Systems shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Hexcel beats Elbit Systems on 13 of the 17 factors compared between the two stocks.
Hexcel Corporation is a composites company. The Company develops, manufactures, and markets lightweight, structural materials, including carbon fibers, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, engineered honeycomb and structures, for use in Commercial Aerospace, Space and Defense and Industrial markets. It operates in two segments: Composite Materials and Engineered Products. The Composite Materials segment consists of its carbon fiber, specialty reinforcements, resins, prepregs and other fiber-reinforced matrix materials, and honeycomb core product lines. The Engineered Products segment consists of lightweight structures, molded components, engineered core and honeycomb products with added functionality. Its products are used in a range of end applications, such as commercial and military aircraft, space launch vehicles and satellites, wind turbine blades, automotive, and recreational products.
About Elbit Systems
Elbit Systems Ltd. is an international technology company engaged in a range of programs across the world. The Company develops and supplies a portfolio of airborne, land and naval systems and products for defense, homeland security and commercial aviation applications. Its systems and products are installed on new platforms, and it also performs platform modernization programs. In addition, it provides a range of support services. The Company’s activities include military aircraft and helicopter systems; helmet mounted systems; commercial aviation systems and aerostructures; unmanned aircraft and unmanned surface vessels; land vehicle systems; command, control, communications, computer and intelligence (C4I) systems; intelligence and cyber systems; electro-optic and countermeasures systems; electronic warfare and signal intelligence systems, and various commercial activities. It operates primarily in the defense and homeland security arenas.
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