Reviewing Cereplast (CERPQ) & Hexcel (HXL)

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Cereplast (OTCMKTS:CERPQ) and Hexcel (NYSE:HXL) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, analyst recommendations, dividends and profitability.

Valuation and Earnings

This table compares Cereplast and Hexcel’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cereplast N/A N/A N/A N/A N/A
Hexcel $1.97 billion 2.59 $284.00 million $2.68 22.19

Hexcel has higher revenue and earnings than Cereplast.

Volatility & Risk

Cereplast has a beta of -2.92, indicating that its share price is 392% less volatile than the S&P 500. Comparatively, Hexcel has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.

Institutional and Insider Ownership

98.0% of Hexcel shares are held by institutional investors. 1.1% of Cereplast shares are held by company insiders. Comparatively, 1.3% of Hexcel shares are held by company 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 Cereplast and Hexcel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cereplast N/A N/A N/A
Hexcel 13.95% 18.08% 9.28%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Cereplast and Hexcel, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cereplast 0 0 0 0 N/A
Hexcel 1 5 6 0 2.42

Hexcel has a consensus target price of $72.55, indicating a potential upside of 21.99%. Given Hexcel’s higher possible upside, analysts clearly believe Hexcel is more favorable than Cereplast.

Dividends

Hexcel pays an annual dividend of $0.60 per share and has a dividend yield of 1.0%. Cereplast does not pay a dividend. Hexcel pays out 22.4% of its earnings in the form of a dividend. Hexcel has raised its dividend for 2 consecutive years.

Summary

Hexcel beats Cereplast on 11 of the 12 factors compared between the two stocks.

Cereplast Company Profile

Cereplast, Inc. develops and commercializes bio-based resins. It provides Cereplast Compostables resins, which are compostable, bio-based, and ecologically sound substitutes for petroleum-based plastics targeting compostable bags, single-use food service products, and packaging applications. The company also offers Cereplast Sustainables resins, including Cereplast Hybrid resins that replace up to 55% of the petroleum content in conventional plastics with bio-based materials, such as industrial starches sourced from plants that are used in automotive, consumer goods, consumer electronics, medical, packaging, and construction markets; and Cereplast Algae Plastic resins, which transforms algae into bioplastics. Its compostable and sustainable resins are used in injection molding, thermoforming, blown films, blow molding, extrusion for profiles, and extrusion coating. The company was formerly known as Biocorp North America Inc. and changed its name to Cereplast, Inc. in March 2005. Cereplast, Inc. was incorporated in 2001 and is headquartered in Seymour, Indiana. On March 27, 2014, the voluntary petition of Cereplast, Inc. for reorganization under Chapter 11 was converted to Chapter 7. It had filed for Chapter 11 bankruptcy on February 10, 2014.Cereplast, Inc. is in Liquidation.

Hexcel Company Profile

Hexcel Corporation, together with its subsidiaries, develops, manufactures, and markets structural materials for use in commercial aerospace, space and defense, and industrial markets. The company operates in two segments, Composite Materials and Engineered Products. The Composite Materials segment manufactures and markets carbon fibers, fabrics and specialty reinforcements, prepregs and other fiber-reinforced matrix materials, structural adhesives, honeycombs, molding compounds, tooling materials, polyurethane systems, and laminates that are used in military and commercial aircraft, wind turbine blade, recreational product, and other industrial applications, as well as in cars, boats, and trains. 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, helicopter blades, spars, and tip caps; and aircraft structural sub-components and semi-finished components for use in helicopter blades, engine nacelles, and aircraft surfaces, such as flaps, wings, elevators, and fairings. The company sells products directly through its sales personnel, as well as through independent distributors and manufacturer representatives in the Americas, Europe, the Asia Pacific, Russia, and Africa. Hexcel Corporation has a strategic alliance with Arkema to develop thermoplastic composite solutions. The company was founded in 1946 and is headquartered in Stamford, Connecticut.

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