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Howmet Aerospace Inc. (HWM), headquartered in Pittsburgh, Pennsylvania, provides advanced engineered solutions for the aerospace and transportation industries. Valued at $43.8 billion by market cap, the company offers engines, fasteners, and structures, as well as forged wheels.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and HWM perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the aerospace & defense industry. HWM's specialization in lightweight metals engineering and manufacturing has solidified its position as a key supplier for aircraft engines and turbines. Through cutting-edge products like advanced airfoils and specialized fasteners, HWM meets the rigorous standards of the aerospace industry, leading to improved performance and efficiency.
Despite its notable strength, HWM slipped 9.4% from its 52-week high of $120.71, achieved on Dec. 6. Over the past three months, HWM stock has gained 12.2%, outperforming the Industrial Select Sector SPDR Fund’s (XLI)1.4% losses during the same time frame.
In the longer term, shares of HWM rose 102.1% on a YTD basis and climbed 103.8% over the past 52 weeks, outperforming XLI’s YTD gains of 16% and 16.8% returns over the last year.
To confirm the bullish trend, HWM has been trading above its 200-day moving average over the past year. However, despite the positive price momentum throughout the year, it has been trading below its 50-day moving average recently.
Howmet's strong performance is due to the momentum in the commercial aerospace market, driven by increased air travel and demand for aircraft. The company benefits from increased spending on parts and products for aircraft, as well as from the demand for more fuel-efficient and environmentally friendly aircraft. Additionally, the defense side of the industry is also showing positive momentum with steady government support. Howmet is well-positioned for growth with robust orders and an increased defense budget.
On Nov. 6, HWM shares closed up more than 12% after reporting its Q3 results. Its adjusted EPS of $0.71 surpassed Wall Street expectations of $0.65. The company’s revenue was $1.8 billion, missing Wall Street forecasts of $1.9 billion. For Q4, HWM expects its adjusted EPS to be between $0.70 and $0.72, and it expects revenue in the range of $1.85 billion to $1.89 billion.
HWM’s rival, TransDigm Group Incorporated (TDG) shares lagged behind the stock, with a 24.6% uptick on a YTD basis and solid 26.2% gains over the past 52 weeks.
Wall Street analysts are bullish on HWM’s prospects. The stock has a consensus “Strong Buy” rating from the 21 analysts covering it, and the mean price target of $123.09 suggests a potential upside of 12.6% from current price levels.
