Howmet Raises EPS Outlook for 2025: Is This Expectation Valid?

Core Insights - Howmet Aerospace Inc. (HWM) raised its 2025 adjusted earnings per share (EPS) outlook to $3.36-$3.44, up from $3.13-$3.21, following a strong first-quarter performance, indicating confidence in operational execution and favorable aerospace market conditions [1][2][9] Financial Performance - The company reported an adjusted EPS of 86 cents in Q1 2025, reflecting a 51% increase year-over-year, attributed to strong cost discipline, favorable product pricing, and reduced interest expenses [2][9] - HWM's adjusted EBITDA margin for Q1 was 28.8%, an increase of 480 basis points, driven by pricing strength and productivity gains [3] - The Fastening Systems and Engineered Structures segments saw adjusted EBITDA margin expansions of 710 and 720 basis points, respectively [3] Market Dynamics - Revenues from the commercial aerospace market increased by 9% year-over-year in Q1, while revenues from the defense aerospace market surged by 19% [4] - Sustained demand in aerospace markets and improving margins position HWM favorably to meet its 2025 goals, despite challenges in the commercial transportation market [5] Peer Comparison - RTX Corporation reported adjusted earnings of $1.47 per share in Q1 2025, a 9.7% improvement from the previous year, with a 2025 EPS expectation of $6.00-$6.15 [6] - GE Aerospace delivered adjusted earnings of $1.49 per share in Q1 2025, a 60% year-over-year increase, with a 2025 EPS forecast of $5.10-$5.45 [7] Stock Performance - HWM shares have surged by 102.1% over the past year, significantly outperforming the industry growth of 13.7% [8] - The company is currently trading at a forward price-to-earnings ratio of 44.91X, above the industry average of 26.42X [11]