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 ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. While many investors like to look for momen ...

Group 1 - Howmet (HWM) is a notable stock within the Construction sector, which ranks 4 among 16 groups in the Zacks Sector Rank [2] - HWM has achieved a year-to-date gain of approximately 75.3%, significantly outperforming the average gain of 16.4% for Construction stocks [4] - The Zacks Consensus Estimate for HWM's full-year earnings has increased by 9.5% over the past quarter, indicating a positive trend in analyst sentiment [3] Group 2 - Howmet is part of the Engineering - R and D Services industry, which ranks 90 among 20 individual stocks, and has gained an average of 26.5% this year [5] - Advanced Drainage Systems (WMS) is another Construction stock that has outperformed the sector with a year-to-date increase of 20.3% [4] - The consensus EPS estimate for Advanced Drainage Systems has risen by 7.3% over the past three months, and it currently holds a Zacks Rank of 1 (Strong Buy) [5]

This aerospace and defense supplier continues to exceed expectations. Howmet Aerospace (HWM -0.87%) stock is up a whopping 75% in 2024 and rose 14.7% in the last week to Friday morning trading. The latest leg up is due to its impressive second-quarter earnings release earlier this week. Howmet's end markets The company generates around 52% of its sales from commercial aerospace and 16% from defense aerospace, with commercial transportation at about 18%. The remaining 14% is under the "industrial and other" ...