Is Hexcel Corp. overvalued or undervalued?

As of 24 July 2025, the valuation grade for Hexcel Corp. has moved from expensive to very expensive, indicating a significant concern regarding its current pricing. The company appears to be overvalued, especially when considering its P/E ratio of 35, which is substantially higher than the industry average reflected by its peers, such as Textron, Inc. with a P/E of 17.37 and Huntington Ingalls Industries, Inc. at 27.01. Additionally, Hexcel's EV to EBITDA ratio stands at 29.92, again suggesting a premium compared to the industry.
In terms of performance metrics, Hexcel's PEG ratio of 0.31 and ROCE of 10.05% further highlight the disparity between its valuation and financial efficiency. The stock has underperformed relative to the S&P 500, with a 1-year return of 3.29% compared to the index's 17.14%, and a stark contrast in 3-year returns of 9.92% versus 70.41%. This trend reinforces the notion that Hexcel Corp. is not only overvalued but also lagging behind broader market performance.