Investors might want to bet on Howmet (HWM) , as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices. The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate. The power of a changing ...

The latest trading session saw Howmet (HWM) ending at $95.28, denoting a +1.11% adjustment from its last day's close. The stock outperformed the S&P 500, which registered a daily gain of 0.54%. Meanwhile, the Dow experienced a rise of 0.72%, and the technology-dominated Nasdaq saw an increase of 0.65%. Prior to today's trading, shares of the maker of engineered products for the aerospace and other industries had lost 1.41% over the past month. This has lagged the Construction sector's gain of 5.07% and the ...

Summary of Howmet Aerospace Inc. Conference Call Company Overview - **Company**: Howmet Aerospace Inc. (NYSE: HWM) - **Industry**: Aerospace and Defense Key Points and Arguments Aerospace Build Rates and Demand - The focus is on the demand for aerospace products in 2025, with expectations that both Boeing and Airbus will increase production rates to meet airline needs for fuel efficiency and emissions targets [3][4][5] - Airlines are expected to require more products, both for new aircraft and aftermarket spare parts, due to the aging fleet and increased operational demands [4][5] Supply Chain Management - The past three years have presented challenges in managing supply chains and labor due to inconsistent demand and crises affecting production rates, such as the grounding of the 737 and 787 [7][8] - Howmet has been cautious in its financial guidance, ensuring that commitments to suppliers are manageable while meeting customer demands [9][10] Recruitment and Capital Expenditure - Howmet plans to recruit approximately 1,000 new employees in 2025, depending on demand and efficiency metrics [12] - The company has increased capital expenditures to meet new engine requirements, indicating a proactive approach to future demand [12][24] Engine Margins and Technology - The engine segment achieved a record margin of 31% in Q2, significantly higher than the 22%-23% margins seen in 2019, attributed to advancements in technology and product sophistication [13][14] - Howmet is leveraging military engine technologies for commercial applications, enhancing performance and efficiency [15][16] Long-term Agreements and Revenue Outlook - Recent long-term agreements with major engine OEMs are expected to drive organic growth, with a focus on controlled risk profiles and contracted revenue streams [22][24] - Revenue from these agreements is anticipated to ramp up in 2026, with potential early contributions in late 2025 [26] Market Share and Growth Potential - Howmet has gained approximately 1% market share in engines annually over the past four to five years, with no perceived ceiling on future growth due to ongoing capabilities and product offerings [27][28] - The company is also expanding its space business, which has shown healthy growth and is transitioning to long-term agreements [29] Aftermarket and Spare Parts - The aftermarket segment is projected to exceed $1.1 billion, increasing from 11% to 16% of total revenue, driven by higher duty cycles and time-on-wing issues [41] - The company has backfilled spare parts inventories, indicating strong demand in the aftermarket [40] Fasteners and Structural Components - Fasteners margins are currently around 25%-26%, with expectations for improvement as wide-body production increases [42][44] - The structural segment, while lower margin, is expected to improve as conditions for wide-body aircraft production stabilize [47][49] Financial Management and Capital Deployment - Howmet is focused on managing its balance sheet effectively, reducing debt, and enhancing free cash flow through share buybacks and dividend increases [53][55] - The company has successfully refinanced its debt, resulting in a projected annualized savings of $20 million [55] Additional Important Insights - The company emphasizes the importance of automation in production processes to enhance productivity and meet demand [17] - Howmet tracks every part through its production process, ensuring accountability and efficiency [19] - The management remains cautious about overcommitting to production rates, focusing instead on sustainable growth and operational efficiency [8][10]

It has been about a month since the last earnings report for Howmet (HWM) . Shares have added about 0.9% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Howmet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Howmet Q2 Earnings Beat Estimates, Revenues Increase ...

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Howmet (HWM), and suggests that while the average brokerage recommendation (ABR) indicates a strong buy, investors should not rely solely on this information for investment decisions [1][3]. Group 1: Brokerage Recommendations - Howmet has an average brokerage recommendation (ABR) of 1.35, indicating a position between Strong Buy and Buy, based on recommendations from 20 brokerage firms [2]. - Out of the 20 recommendations, 17 are Strong Buy and 1 is Buy, which means Strong Buy and Buy account for 85% and 5% of all recommendations respectively [2]. - Despite the positive ABR, studies show limited success of brokerage recommendations in guiding investors to select stocks with the best price increase potential [3][4]. Group 2: Analyst Bias and Alternative Measures - Brokerage analysts often exhibit a strong positive bias due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [4][8]. - The Zacks Rank, a proprietary stock rating tool, categorizes stocks based on earnings estimate revisions and has a strong track record in predicting stock price performance [6][9]. - The Zacks Rank is distinct from ABR, as it is based on quantitative models and is updated more frequently to reflect changes in earnings estimates [7][10]. Group 3: Current Earnings Estimates for Howmet - The Zacks Consensus Estimate for Howmet has increased by 8.5% over the past month to $2.56, indicating growing optimism among analysts regarding the company's earnings prospects [11]. - The recent change in the consensus estimate, along with other factors, has resulted in a Zacks Rank 1 (Strong Buy) for Howmet, suggesting a potential for stock price appreciation [12].

Core Viewpoint - Howmet (NYSE:HWM) reported strong earnings for 2Q24, with a 14% year-over-year revenue growth primarily driven by the commercial aerospace market, which constitutes about 52% of total revenue [2][8][14] Financial Performance - Revenue for 2Q24 increased by 14% year-over-year, with commercial aerospace growing 27% year-over-year and defense aerospace increasing 11% year-over-year [8][14] - Adjusted operating income margin expanded from 18.3% to 22%, while adjusted EBITDA increased by 31% year-over-year to $483 million, resulting in an adjusted EBITDA margin rise from 22.3% to 25.7% [9][14] - Adjusted EPS rose 52% year-over-year from $0.44 to $0.67 [9][14] Market Dynamics - The commercial aerospace market is crucial for HWM, accounting for over half of its revenue, and is supported by strong air travel demand, particularly in the Asia-Pacific region, where international travel has grown by about 20% [6][14] - Data from the International Civil Aviation Organisation indicates that both revenue passenger kilometres (RPK) and available seat kilometres (ASK) have increased compared to June 2019, with ASK up 7.7% and RPK up 1.8% [6][8] Segment Performance - HWM's engine products segment, which accounts for 49% of total revenue, reported a 14% year-over-year revenue increase, driven by growth in commercial aerospace and defense aerospace [5][10] - The fastening systems segment grew by 20%, and engineered structures increased by 38%, while the forged wheels segment saw a decline of 4% [9] Outlook and Guidance - HWM's guidance for FY2024 includes revenue estimates between $7.4 billion and $7.48 billion, with adjusted EBITDA forecasted to be in the range of $1.855 billion to $1.875 billion, implying an adjusted EBITDA margin of approximately 25.1% [11] - The company has increased its expectations for Boeing's 737 aircraft build rate from 20 to 22 aircraft per month, reflecting optimism despite ongoing production challenges at Boeing [7][14] Relative Valuation - HWM's forward revenue growth rate is 12.91%, outperforming the peers' median of 10.96%, and its EBITDA margin TTM is 23.47%, significantly higher than the peers' median of 12.88% [11] - HWM's current forward non-GAAP P/E ratio is 36.22x, above the peers' median of 27.90x, justified by its strong growth and profitability metrics [11]

Thomas Barwick Investment overview I give a hold rating to Howmet Aerospace (NYSE:HWM). I am bullish on the fundamentals of the business, given the strong underlying secular tailwinds and the potential for enhanced capital returns. However, the stock is trading at a high valuation, which provides little margin of safety to investors today. Hence, I believe investors should wait for a better entry point. Business description HWM is in the business of providing engineered solutions for the aerospace and trans ...

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Howmet (HWM) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company. The upward trend in estimate revisions for this maker of engineered products for the aerospace and other industries reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical ...

Howmet (HWM) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system. The power of ...