In fact, just last year, we named Calhoun one of our five CEOs of the year, crediting him with finally guiding Boeing to take off after a long tarmac delay. He deserves tremendous credit for charting a path back to profitability–without needing a single airplane purchase from China. And the multiyear backlogs at Boeing and Airbus and other drivers discussed above ensure growth for many years to come.At the very least, this latest mess turns up the heat for CEO Dave Calhoun, who has absorbed relentless slings and arrows from all corners for problems that largely predate him or are outside his control, including misfires with regulators, COVID shutdowns, order cancellations, and high indebtedness. Still, Wall Street analysts are expecting mid-teens percentage growth in earnings from 2023-2025. The current valuation (37 times estimated 2023 earnings) might seem superficially high. Ultimately, as Calhoun alludes to, the decision to go for composites in new plane development spells tremendous long-term growth at Hexcel, and the stock remains highly attractive for long-term investors. In addition, there's an opportunity from wind turbines and reengineering newer aircraft, as well as the parallel market of space and defense. Meanwhile, larger business jets such as General Dynamics' (NYSE: GD) Gulfstream brand and Dassault's (OTC: DASTY) Falcons have content in the range of $200,000 to $500,000 per plane for Hexcel. While 2035 might seem a long time away, Hexcel has a growth opportunity from the ramping up in the 737 MAX and A320neo production and the outsize prospects from growth in composite widebody production. That said, Calhoun's commentary on composites being an integral part of future airplane development and the company using its experience on the composite-rich 787 programs ($1.4 million in content per plane for Hexcel), shores up confidence in long-term demand for the industrial company. And he has made it clear Boeing won't have a new airplane in place before 2035. Therefore, bringing forward the development of new planes spells nearer-term revenue for Hexcel.Īirbus is aiming to develop a hydrogen-powered commercial aircraft by 2035, and Calhoun shelved plans for a new midsize airplane (NMA) when he took over as Boeing CEO in 2020. Not least because, as discussed above, newer airplanes tend to contain more composites. It's slightly disappointing that there won't be a new airplane coming from Airbus or Boeing in the near future. Similarly, the older A320 generates $300,000 per plane for Hexcel, compared to $450,000 on the A320neo. Similarly, Airbus plans to ramp up its production, with its flagship A320neo moving to a rate of 65 a month by the end of 2024 and 75 a month in 2026, from 43 a month in 2022.įor a flavor of how increasing production, and increasing production of newer planes, helps Hexcel's growth, consider that its content per plane on the older 737 variants is around $300,000 compared to $400,000 on the 737 MAX. Meanwhile, the production rate of its wide-body 787 Dreamliner is expected to ramp up from 3 a month at present to 10 a month in the same time frame.
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