Howmet vs. L3Harris: Which Aerospace & Defense Stock Should You Bet On?

Core Viewpoint - Howmet Aerospace Inc. (HWM) is currently positioned as a stronger investment compared to L3Harris Technologies, Inc. (LHX) due to its robust growth in both commercial and defense aerospace markets, while L3Harris faces challenges from high debt and labor shortages [2][24]. Howmet Aerospace Inc. (HWM) - The commercial aerospace market is a significant growth driver for Howmet, with revenues increasing by 8% year over year in Q2 2025, accounting for 52% of its business [4]. - Demand for Howmet's products is supported by the rise in air travel and the production recovery of Boeing 737 MAX aircraft [4]. - The defense segment also shows strong performance, with revenues surging 21% year over year in Q2 2025, making up 17% of the company's business [5]. - The U.S. Defense Appropriations Act for FY 2026 allocates $831.5 billion, which is expected to benefit Howmet's defense contracts [6]. - Howmet has a shareholder-friendly approach, paying $83 million in dividends and repurchasing $300 million in shares in the first half of 2025 [7]. - The company has a strong liquidity position, with cash equivalents and receivables of $545 million against short-term maturities of only $5 million [9]. - The Zacks Consensus Estimate for HWM's 2025 sales and EPS indicates year-over-year growth of 9.4% and 32.7%, respectively [15]. L3Harris Technologies, Inc. (LHX) - L3Harris benefits from solid U.S. budget funding, particularly with its HBTSS satellite, which is crucial for tracking hypersonic missiles [10][11]. - The company has secured significant international revenues, accounting for approximately 20.7% of total revenues in Q2 2025 [11]. - L3Harris has faced challenges due to a high debt level of $10.98 billion, which exceeds its cash and cash equivalents of $480 million [13]. - Labor shortages in the aerospace-defense industry pose a risk to L3Harris's ability to meet production timelines [14]. - The Zacks Consensus Estimate for LHX's 2025 sales indicates a modest growth of 2%, but EPS is projected to decline by 19.9% [15]. Price Performance and Valuation - Over the past year, Howmet shares have increased by 76.9%, while L3Harris stock has gained 20.4% [18]. - Howmet is trading at a forward P/E ratio of 42.42X, above its three-year median of 28.18X, while L3Harris's forward P/E is at 23.61X, above its median of 16.34X [19].