Analyzing Huntington Ingalls Industries (HII) & Hexcel Corporation (HXL)

Huntington Ingalls Industries (NYSE: HII) and Hexcel Corporation (NYSE:HXL) are both mid-cap aerospace companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Insider & Institutional Ownership

85.4% of Huntington Ingalls Industries shares are held by institutional investors. Comparatively, 96.6% of Hexcel Corporation shares are held by institutional investors. 2.2% of Huntington Ingalls Industries shares are held by insiders. Comparatively, 2.1% of Hexcel Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Huntington Ingalls Industries and Hexcel Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Huntington Ingalls Industries 7.93% 31.12% 8.28%
Hexcel Corporation 13.13% 18.40% 9.36%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Huntington Ingalls Industries and Hexcel Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Huntington Ingalls Industries 2 4 2 0 2.00
Hexcel Corporation 0 6 6 0 2.50

Huntington Ingalls Industries presently has a consensus target price of $206.83, indicating a potential downside of 12.33%. Hexcel Corporation has a consensus target price of $59.20, indicating a potential downside of 5.17%. Given Hexcel Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Hexcel Corporation is more favorable than Huntington Ingalls Industries.

Earnings and Valuation

This table compares Huntington Ingalls Industries and Hexcel Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Huntington Ingalls Industries $7.19 billion 1.49 $1.03 billion $12.24 19.28
Hexcel Corporation $1.95 billion 2.88 $442.00 million $2.77 22.54

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

Volatility & Risk

Huntington Ingalls Industries has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, Hexcel Corporation has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Dividends

Huntington Ingalls Industries pays an annual dividend of $2.40 per share and has a dividend yield of 1.0%. Hexcel Corporation pays an annual dividend of $0.50 per share and has a dividend yield of 0.8%. Huntington Ingalls Industries pays out 19.6% of its earnings in the form of a dividend. Hexcel Corporation pays out 18.1% 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. Huntington Ingalls Industries has increased its dividend for 4 consecutive years. Huntington Ingalls Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Hexcel Corporation beats Huntington Ingalls Industries on 9 of the 17 factors compared between the two stocks.

About Huntington Ingalls Industries

Huntington Ingalls Industries, Inc. is a military shipbuilding company and a provider of professional services to partners in government and industry. The Company’s business consists of the design, construction, repair and maintenance of nuclear-powered ships and non-nuclear ships for the United States Navy and coastal defense surface ships for the United States Coast Guard, as well as the refueling and overhaul and inactivation of nuclear-powered ships for the United States Navy. It operates through three segments: Ingalls Shipbuilding (Ingalls), Newport News Shipbuilding (Newport News) and Technical Solutions. Its Ingalls segment includes its non-nuclear ship design, construction, repair and maintenance businesses. Its Newport News includes all of its nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Its Technical Solutions segment provides a range of professional services to the governmental, energy, and oil and gas markets.

About Hexcel Corporation

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.

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