Analyzing Hexcel (NYSE:HXL) and Woodward (NASDAQ:WWD)

Woodward (NASDAQ:WWD) and Hexcel (NYSE:HXL) are both aerospace companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, dividends, earnings, institutional ownership and valuation.

Profitability

This table compares Woodward and Hexcel’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Woodward	12.39%	17.68%	9.35%
Hexcel	3.67%	9.25%	5.15%

Analyst Ratings

This is a breakdown of recent ratings for Woodward and Hexcel, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Woodward	0	4	8	0	2.67
Hexcel	2	8	3	0	2.08

Woodward currently has a consensus target price of $298.78, indicating a potential downside of 3.89%. Hexcel has a consensus target price of $73.33, indicating a potential downside of 4.61%. Given Woodward’s stronger consensus rating and higher possible upside, research analysts clearly believe Woodward is more favorable than Hexcel.

Institutional & Insider Ownership

81.2% of Woodward shares are held by institutional investors. Comparatively, 95.5% of Hexcel shares are held by institutional investors. 0.7% of Woodward shares are held by company insiders. Comparatively, 1.4% of Hexcel shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Woodward and Hexcel”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Woodward	$3.57 billion	5.23	$442.11 million	$7.19	43.24
Hexcel	$1.88 billion	3.26	$132.10 million	$0.85	90.45

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

Dividends

Woodward pays an annual dividend of $1.12 per share and has a dividend yield of 0.4%. Hexcel pays an annual dividend of $0.68 per share and has a dividend yield of 0.9%. Woodward pays out 15.6% of its earnings in the form of a dividend. Hexcel pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Woodward has raised its dividend for 5 consecutive years and Hexcel has raised its dividend for 3 consecutive years.

Risk and Volatility

Woodward has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, Hexcel has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Summary

Woodward beats Hexcel on 12 of the 17 factors compared between the two stocks.

About Woodward

Woodward, Inc. designs, manufactures, and services control solutions for the aerospace and industrial markets worldwide. The company operates in two segments, Aerospace and Industrial. The Aerospace segment provides fuel pumps, metering units, actuators, air valves, specialty valves, fuel nozzles, and thrust reverser actuation systems for turbine engines and nacelles, and flight deck controls, actuators, servocontrols, motors, and sensors for aircraft. These products are used on commercial and private aircraft and rotorcraft, as well as on military fixed-wing aircraft and rotorcraft, guided weapons, and other defense systems. It also provides aftermarket maintenance, repair and overhaul, and other services to commercial airlines, repair facilities, military depots, third party repair shops, and other end users. This segment sells its products to original equipment manufacturers (OEMs), tier-one suppliers, and contractors, as well as through aftermarket sales of components, such as provisioning spares and replacements. The Industrial segment offers actuators, valves, pumps, fuel injection systems, solenoids, ignition systems, speed controls, electronics and software, and sensors. These products are used on industrial gas turbines, steam turbines, compressors, and reciprocating engines. This segment sells its aftermarket products, and other related services to OEMs through an independent network of distributors, as well as directly to end users. The company was founded in 1870 and is headquartered in Fort Collins, Colorado.

About Hexcel

Hexcel Corporation develops, manufactures, and markets carbon fibers, structural reinforcements, honeycomb structures, resins, and composite materials and parts for use in commercial aerospace, space and defense, and industrial applications. It operates through two segments, Composite Materials and Engineered Products. The Composite Materials segment manufactures and markets fabrics, multi-axials, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, structural adhesives, molding compounds, tooling materials, polyurethane systems, and laminates that are used in military and commercial aircraft, wind turbine blades, recreational products, and other industrial applications, as well as in automotive, marine, and rail transportation. The Engineered Products segment manufactures and markets aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, rotorcraft blades, spars, and tip caps; and aircraft structural sub-components and semi-finished components used in rotorcraft blades, engine nacelles, and aircraft surfaces, such as flaps, wings, elevators, and fairings; and RF interference control products for military and aerospace applications. This segment also provides interference control materials, structural composites, and services; dielectric absorber foams; magnetic absorbers; and thermoplastics for commercial and defense applications. The company sells its products directly through its managers, product managers, and sales personnel, as well as through independent distributors in the Americas, Europe, the Asia Pacific, India, and Africa. Hexcel Corporation was founded in 1946 and is headquartered in Stamford, Connecticut.