Howmet Aerospace: A Steady Climb in Financial Performance
With a market cap of $40.8 billion, Howmet Aerospace Inc. (HWM), based in Pittsburgh, Pennsylvania, operates in the aerospace and transportation sectors specializing in advanced engineered solutions. The company manufactures components for jet engines, structural aerospace parts, and forged aluminum wheels, catering to markets across defense, commercial aviation, and industrial applications worldwide.
Over the past 52 weeks, shares of Howmet Aerospace have greatly outperformed the broader market. HWM has surged 108.1% during this period, while the S&P 500 Index ($SPX) has increased by 31.1%. In 2024, HWM shares have gained 84.5%, far surpassing the SPX’s 19.8% increase year-to-date (YTD).
In particular, Howmet Aerospace has outpaced the SPDR S&P Aerospace & Defense ETF’s (XAR) 28.2% return over the past year, as well as a 14.7% YTD return.
The strong growth of Howmet Aerospace can be attributed to the booming commercial aerospace market, which accounts for over half of the company’s revenue. Demand for air travel has soared, leading to increased aircraft build rates. In addition, the company has realized significant margin improvements and rising sales in key areas like engine products and fastening systems.
Moreover, shares jumped 13.2% on July 30 following the release of strong Q2 results. The company reported an EPS of $0.67 and revenue of $1.9 billion, both exceeding Wall Street expectations thanks to solid performance in its engine products and engineered structures segments. Howmet revised its full-year EPS forecast to a range of $2.53 – $2.57 with sales projected between $7.4 billion and $7.5 billion, surpassing analysts’ estimates as it anticipates ongoing strong demand for aerospace components amid a robust air travel environment and an aging fleet. Additionally, free cash flow of $342 million supports stock buybacks and debt reduction, strengthening investors’ confidence in its financial health and growth potential.
For the current fiscal year ending December, analysts predict a 40.8% year-over-year growth in HWM’s EPS, projecting it to reach $2.59. The company has consistently exceeded consensus earnings estimates in each of the last four quarters.
Among the 21 analysts covering HWM, the consensus rating is a “Strong Buy,” comprised of 17 “Strong Buy” ratings, one “Moderate Buy,” two “Holds,” and one “Strong Sell.”
On October 21, Bernstein raised Howmet Aerospace’s price target to $127 and maintained an “Outperform” rating, noting an improved long-term outlook, a higher market multiple, and additional upside potential ahead of quarterly results.
The average price target among analysts stands at $108.73, suggesting a modest 8.9% premium to HWM’s current price. The highest target of $127 indicates a potential upside of 27.2% from current levels.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
