Howmet (HWM) Is Considered a Good Investment by Brokers: Is That True?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Howmet (HWM), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][5][10]. Brokerage Recommendations for Howmet - Howmet has an average brokerage recommendation (ABR) of 1.46, indicating a consensus between Strong Buy and Buy, based on recommendations from 24 brokerage firms [2][4]. - Out of the 24 recommendations, 18 are Strong Buy and 1 is Buy, which accounts for 75% and 4.2% of all recommendations respectively [2]. Limitations of Brokerage Recommendations - The article highlights that brokerage recommendations may not be reliable due to the vested interests of brokerage firms, which often lead to overly optimistic ratings [6][10]. - Research indicates that for every "Strong Sell" recommendation, there are five "Strong Buy" recommendations, suggesting a bias in favor of positive ratings [6][10]. Zacks Rank as an Alternative - The Zacks Rank is presented as a more effective tool for predicting stock price movements, categorizing stocks into five groups based on earnings estimate revisions [8][11]. - The Zacks Rank is timely and reflects the latest earnings estimates, unlike the ABR, which may not be up-to-date [12]. Current Earnings Estimates for Howmet - The Zacks Consensus Estimate for Howmet has increased by 2.4% over the past month to $3.57, indicating growing optimism among analysts regarding the company's earnings prospects [13]. - This increase in consensus estimates has contributed to a Zacks Rank of 2 (Buy) for Howmet, suggesting a positive outlook for the stock [14].