Should Howmet Stock be in Your Portfolio After Solid Q4 Earnings?

Core Insights - Howmet Aerospace Inc. (HWM) has seen significant stock performance, trading near its 52-week high of $140.55, with an 8.9% increase since its fourth-quarter 2024 results release [1][2] - The company reported non-GAAP earnings of 74 cents per share, exceeding estimates by 2.8%, and a revenue of $1.90 billion, which is a 9% year-over-year increase [2] Group 1: Financial Performance - HWM's fourth-quarter 2024 non-GAAP earnings increased by 40% year over year [2] - Revenue from the commercial aerospace market rose by 12.9% year over year, making up 53% of total business [6] - Defense aerospace revenues increased by 22% year over year, accounting for 16% of total revenues [7] Group 2: Market Drivers - The commercial aerospace market is a key growth driver, supported by increased air travel and demand for new, fuel-efficient aircraft [5][6] - The expanding defense budget, with a fiscal year 2025 Defense Appropriations Act providing $852.2 billion, is expected to enhance HWM's growth prospects [8] Group 3: Future Outlook - HWM anticipates revenues between $7.93 billion and $8.13 billion in 2025, reflecting an 8% year-over-year growth at the midpoint [9] - The Zacks Consensus Estimate for 2025 earnings has increased by 1.6% to $3.22 per share, indicating a 19.7% year-over-year growth [12] Group 4: Shareholder Returns - In 2024, HWM paid $109 million in dividends and repurchased $500 million in shares, with a 25% dividend increase announced for January 2025 [10][11] - The company has a total share repurchase authorization of $2.15 billion as of January 31, 2025 [11] Group 5: Valuation Concerns - HWM's stock is trading at a forward P/E ratio of 42.36X, significantly higher than the industry average of 22.27X and its peer RTX Corporation at 20.15X [13]