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Howmet Aerospace (HWM)
NYSE:HWM
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Howmet Aerospace
(NYSE:HWM)73Outperform
Positive Factors
Earnings
Howmet Aerospace reported adjusted EPS of $0.74, beating analyst expectations due to strong operating profit.
Financial Performance
Crossing the $1 billion per year free cash flow threshold despite high capital expenditure shows strong financial health and operational efficiency.
Negative Factors
Growth Trajectory
Modest delays in growth trajectories for Engine Products and Fastening Systems are expected.
Howmet Aerospace (HWM) vs. S&P 500 (SPY)
Market Cap
$52.77B
Dividend Yield0.25%
Average Volume (3M)3.01M
Price to Earnings (P/E)46.3
Beta (1Y)1.17
Revenue Growth11.90%
EPS Growth52.65%
CountryUS
Employees23,930
SectorIndustrials
Sector Strength66
IndustryAerospace & Defense
Share Statistics
EPS (TTM)2.81
Shares Outstanding405,022,520
10 Day Avg. Volume3,628,064
30 Day Avg. Volume3,005,039
Financial Highlights & Ratios
PEG Ratio0.88
Price to Book (P/B)N/A
Price to Sales (P/S)6.79
Price to Cash Flow (P/CF)26.30
P/FCF Ratio21.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$145.27Price Target Upside16.78% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering16
Howmet Aerospace Business Overview & Revenue Model
Company DescriptionHowmet Aerospace Inc. is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The company specializes in manufacturing high-performance components and products, including jet engine components, aerospace fastening systems, titanium structural parts, and forged aluminum wheels. Howmet Aerospace operates across several key sectors, including aerospace, defense, and commercial transportation, delivering innovative solutions to enhance performance and efficiency.
How the Company Makes MoneyHowmet Aerospace makes money through the design, manufacture, and sale of its highly specialized products, primarily serving the aerospace and transportation industries. The company's revenue model revolves around producing components for jet engines, aircraft structures, industrial gas turbines, and commercial vehicle wheels. Key revenue streams include contracts with major aerospace manufacturers like Boeing and Airbus, sales to defense contractors, and partnerships with automotive companies. Howmet Aerospace benefits from long-term agreements and recurring sales due to the demand for replacement parts and the high entry barriers in its specialized markets. Additionally, the company invests in research and development to innovate and maintain its competitive edge, further supporting its earnings.
Howmet Aerospace Financial Statement Overview
Summary
Howmet Aerospace has shown notable improvements in profitability and balance sheet stability, with a significant increase in profit margins and cash flow. Despite a decline in revenue, the company's financial strategy has enhanced its resilience and growth potential.Income Statement
Howmet Aerospace has demonstrated strong growth in EBIT and net income over recent years, despite a decline in total revenue from 2019 to 2023. The company improved its net profit margin from 3.31% in 2019 to 17.38% in 2023, suggesting enhanced operational efficiency. However, the significant drop in total revenue from 2019 to 2023 remains a concern.70
Positive
Balance Sheet
The debt-to-equity ratio has improved significantly, dropping from 1.29 in 2019 to 0.001 in 2023, indicating reduced leverage and improved financial health. The equity ratio has also shown an upward trend, suggesting a stronger equity position. These improvements reflect a stable and strengthening balance sheet.75
Positive
Cash Flow
The company has shown a strong positive trend in free cash flow, growing from negative figures in 2019 to a robust $977 million in 2023. The operating cash flow to net income ratio has improved, indicating efficient cash generation relative to net income. This positive cash flow trend underscores the company's ability to generate cash effectively.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.43B | 6.64B | 5.66B | 4.97B | 5.26B | Gross Profit |
| 2.31B | 1.87B | 1.56B | 1.38B | 1.38B | EBIT |
| 1.63B | 1.20B | 919.00M | 748.00M | 626.00M | EBITDA |
| 1.84B | 1.47B | 1.26B | 1.09B | 831.00M | Net Income Common Stockholders |
| 1.16B | 765.00M | 469.00M | 258.00M | 261.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 564.00M | 610.00M | 791.00M | 720.00M | 1.61B | Total Assets |
| 10.52B | 10.43B | 10.26B | 10.22B | 11.45B | Total Debt |
| 6.00M | 3.83B | 4.16B | 4.23B | 5.08B | Net Debt |
| -558.00M | 3.23B | 3.37B | 3.51B | 3.46B | Total Liabilities |
| 5.96B | 6.39B | 6.65B | 6.71B | 7.87B | Stockholders Equity |
| 4.55B | 4.04B | 3.60B | 3.51B | 3.58B |
| Cash Flow | Free Cash Flow | |||
| 977.00M | 682.00M | 540.00M | 250.00M | -258.00M | Operating Cash Flow |
| 1.30B | 901.00M | 733.00M | 449.00M | 9.00M | Investing Cash Flow |
| -316.00M | -215.00M | -135.00M | 107.00M | 271.00M | Financing Cash Flow |
| -1.03B | -868.00M | -526.00M | -1.44B | -369.00M |
Howmet Aerospace Technical Analysis
Neutral
124.40
Price Trends
124.14
Positive
117.27
Positive
103.03
Positive
Market Momentum
0.63
Positive
43.67
Neutral
26.79
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HWM, the sentiment is Neutral. The current price of 124.4 is below the 20-day moving average (MA) of 130.91, above the 50-day MA of 124.14, and above the 200-day MA of 103.03, indicating a neutral trend. The MACD of 0.63 indicates Positive momentum. The RSI at 43.67 is Neutral, neither overbought nor oversold. The STOCH value of 26.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HWM.
Howmet Aerospace Risk Analysis
Howmet Aerospace disclosed 28 risk factors in its most recent earnings report. Howmet Aerospace reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Howmet Aerospace Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $70.43B | 17.17 | 27.75% | 1.65% | 4.44% | 110.33% | |
73 Outperform | $52.77B | 46.33 | 26.89% | 0.25% | 11.90% | 52.65% | |
73 Outperform | $8.14B | 21.64 | 22.82% | ― | 4.51% | -2.90% | |
65 Neutral | $4.72B | 36.57 | 8.14% | 1.06% | 6.31% | 28.25% | |
64 Neutral | $13.33B | 16.95 | 11.63% | 0.11% | 0.14% | -5.38% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
37 Underperform | $118.83B | ― | -162.23% | ― | -14.49% | -399.90% |
* Industrials Sector Average
Performance Comparison
HWM
Howmet Aerospace
124.40
59.59
91.95%
ATI
ATI
55.26
5.84
11.82%
BA
Boeing
154.18
-38.31
-19.90%
HXL
Hexcel
58.20
-15.44
-20.97%
NOC
Northrop Grumman
486.52
35.04
7.76%
TXT
Textron
75.42
-16.30
-17.77%
Howmet Aerospace Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -2.88% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, record-breaking results, and strategic improvements in several market segments. However, there were challenges in the commercial transportation and forged wheels segments, which impacted overall performance. Despite these challenges, the company's strong growth, improved leverage, and shareholder returns suggest a positive outlook.Highlights
Record Financial Performance
Revenues, EBITDA, EBITDA margin, and earnings per share (EPS) reached record levels. Full-year EPS increased by 46% year over year, and free cash flow was a record $977 million.
Strong End Market Performance
Commercial aerospace revenue increased by 20% for the full year, while defense aerospace grew by 22%. The industrial and other market segments were up 9% driven by oil and gas, up 19%.
Leverage and Credit Rating Improvement
Net debt to EBITDA improved to 1.4 times and S&P upgraded Howmet's credit rating to BBB.
Significant Shareholder Returns
Howmet repurchased $500 million of common stock and paid $109 million in dividends in 2024.
Engine Products Segment Growth
Revenue increased 14% year over year, with EBITDA growing 30% to $1.15 billion.
Lowlights
Commercial Transportation Challenges
Revenues in commercial transportation were down 12% in the fourth quarter and 7% for the full year.
Forged Wheels Revenue Decline
Forged wheels revenue decreased 12% year over year, with EBITDA down 7% for the full year.
Company Guidance
During the Howmet Aerospace Fourth Quarter and Full Year 2024 Conference Call, the company reported record results, exceeding guidance with a year-over-year revenue increase of 12% and a 27% growth in EBITDA. Fourth quarter earnings per share rose 40% to $0.74, culminating in a full-year EPS of $2.69, up 46% from 2023. Operating margin for Q4 was 23%, and free cash flow reached a record $977 million, representing an 88% conversion of net income. The company repurchased $500 million in common stock, reduced debt by $365 million, and increased dividends by 25%. The balance sheet was strengthened with a net debt to EBITDA leverage of 1.4 times. Looking ahead, Howmet projects 2025 revenues to grow by 8% with Q1 expectations set at $1.935 billion in revenue and an EPS of $0.76. Free cash flow for 2025 is anticipated to surpass $1 billion.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.