10Y annualized return is
excellent
at 21.7% per year
HWM has met or exceeded earnings expectations in
the majority of
recent quarters (8/10)
Strong Return on Equity
Healthy Profit Margins
Strong Free Cash Flow
Low Debt Levels
Solid Liquidity Ratios
💰 Strong Financial Performance
🏗️ Diversified Market Presence
📈 Strong Cash Flow Management
🚀 Growth in Aerospace Demand
🔧 Industrial Gas Turbine Opportunities
High Price-to-Earnings Ratio
Elevated Price-to-Sales Ratio
High Price-to-Free Cash Flow Ratio
Low Cash Ratio
⚠️ Challenges in Commercial Transportation
🔍 Conservative Guidance
Overall, Howmet Aerospace demonstrates strong business quality through its financial performance, diversified market presence, and effective cash flow management. Future prospects remain positive, driven by growth in aerospace demand and opportunities in industrial gas turbines, despite challenges in commercial transportation and a cautious outlook.
Analysis Date: February 13, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Howmet Aerospace Inc. is a company that makes important parts for airplanes and heavy trucks. They produce items like engine components and fasteners, which help keep aircraft running safely. They also create strong materials from metals like titanium and aluminum for various uses in aerospace and defense. Overall, Howmet Aerospace provides solutions that support transportation industries around the world.
Streams of revenue
Geographic Distribution
Estimations for reference only
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Latest News
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports ab...
Howmet Aerospace Inc. preferred shares yielded a 12.6% total return, outperforming the S&P 500, which lost 12.5% in the same period. The preferred sha...
The article provides a methodology for selecting high-growth dividend-paying stocks, focusing on dividend growth and sustainability rather than high c...
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$109.53
Current Market Price: $112.06
IV/P Ratio: 0.98x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-2.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for HWM
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (39.49)
P/B ratio ≤ 1.5 (10.01)
Current ratio ≥ 2.0 (2.17x)
Long-term debt < Net current assets (0.07x)
Margin of safety (-2.0%)
HWM does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
26.52%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
29.27%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
15.55%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
The company maintains solid profit margins with a gross profit margin of 29.27%, operating profit margin of 22.27%, and net profit margin of 15.55%, reflecting efficient cost management.
The free cash flow per share of $2.41 suggests that the company generates ample cash after capital expenditures, which supports ongoing operations and potential dividends.
The price-to-free cash flow (P/FCF) ratio of 54.07 indicates that the stock is valued at a high multiple of its free cash flow, which could imply overvaluation relative to cash generation.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.00x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
2.17x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
The company boasts an impressively low debt-to-equity ratio of 0.0013 and a debt-to-assets ratio of 0.0006, indicating minimal reliance on debt financing and a strong balance sheet.
The current ratio of 2.17 suggests the company has sufficient assets to cover its short-term liabilities, while the quick ratio of 0.98 indicates a reasonable level of liquidity.
The cash ratio of 0.36 reveals that while the company can cover its short-term obligations with cash, it may not have a strong cash reserve relative to current liabilities.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Howmet Aerospace reported record revenues, EBITDA, and earnings per share in 2024, with a 46% increase in EPS over the previous year. The operating margin for Q4 was 23%, showcasing strong profitability.
Howmet operates across various segments including commercial aerospace, defense aerospace, and industrial markets. They noted significant growth in sectors like commercial aerospace (20% for the year) and defense aerospace (22% for the year), indicating a strong market position.
The company achieved an impressive 88% free cash flow conversion rate and has effectively deployed its cash towards share repurchases, debt reduction, and dividends, showcasing strong cash flow management practices.
Howmet anticipates continued growth in the aerospace sector driven by high backlogs for major manufacturers like Boeing and Airbus, with a projected increase in narrow body aircraft builds in 2025. This positions the company well for future revenue growth.
The company is optimistic about the industrial gas turbine segment, citing increased demand due to data center electricity needs and a focus on natural gas. Howmet maintains over 50% market share in turbine blades, positioning it well for future growth.
The commercial transportation segment faced a downturn with a 12% revenue decline in Q4. While Howmet has outperformed the market, the overall challenges in this sector may impact future growth.
Management has expressed caution regarding future visibility and potential challenges in the aerospace supply chain, which could lead to conservative revenue projections and margin expectations.