Cubic Corporation (CUB) and Hexcel Corporation (HXL) Critical Review

Cubic Corporation (NYSE: CUB) and Hexcel Corporation (NYSE:HXL) are both large-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Volatility & Risk

Cubic Corporation has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, Hexcel Corporation has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Earnings and Valuation

This table compares Cubic Corporation and Hexcel Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Cubic Corporation $1.46 billion 1.00 $1.73 million ($1.19) -45.17
Hexcel Corporation $2.00 billion 2.76 $249.80 million $2.77 22.22

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

Analyst Ratings

This is a summary of current recommendations and price targets for Cubic Corporation and Hexcel Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cubic Corporation 0 0 6 0 3.00
Hexcel Corporation 0 6 6 0 2.50

Cubic Corporation presently has a consensus price target of $56.67, suggesting a potential upside of 5.43%. Hexcel Corporation has a consensus price target of $59.20, suggesting a potential downside of 3.82%. Given Cubic Corporation’s stronger consensus rating and higher probable upside, research analysts clearly believe Cubic Corporation is more favorable than Hexcel Corporation.

Profitability

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

Net Margins Return on Equity Return on Assets
Cubic Corporation -2.20% -4.74% -2.22%
Hexcel Corporation 13.13% 18.40% 9.36%

Insider & Institutional Ownership

88.7% of Cubic Corporation shares are held by institutional investors. Comparatively, 96.7% of Hexcel Corporation shares are held by institutional investors. 7.9% of Cubic Corporation shares are held by company insiders. Comparatively, 2.1% of Hexcel Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Cubic Corporation pays an annual dividend of $0.27 per share and has a dividend yield of 0.5%. Hexcel Corporation pays an annual dividend of $0.50 per share and has a dividend yield of 0.8%. Cubic Corporation pays out -22.7% 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.

Summary

Hexcel Corporation beats Cubic Corporation on 10 of the 14 factors compared between the two stocks.

About Cubic Corporation

Cubic Corporation (Cubic) designs, integrates and operates systems, products and services that provide situational awareness for its customers in the transportation and defense industries. The Company operates in three business segments across the global transportation and defense markets, which include Cubic Transportation Systems (CTS), Cubic Global Defense (CGD) and Cubic Global Defense Services (CGD Services). The Company’s CTS segment is a systems integrator of payment and information technology and services for travel solutions. The Company’s CGD Systems is focused on two primary lines of business: training systems and secure communications (SC) products. The Company’s CGD Services segment is a provider of training, operations, intelligence, maintenance, technical and other support services to the United States government and its agencies and allied nations. It also provides cross-domain hardware solutions to address multi-level security challenges across common networks.

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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