HWM Faces Weakness in Commercial Transportation Market: What's Ahead?

Core Insights - Howmet Aerospace Inc. is facing ongoing challenges in its commercial transportation market, with a 3% year-over-year revenue decline in Q3 2025, following declines of 14% and 4% in the first two quarters of the year [1][8] Group 1: Commercial Transportation Market - The decline in commercial truck builds due to tariff-related and economic uncertainties in North America is negatively impacting the company's near-term performance [2] - Demand in the Forged Wheels segment is expected to remain weak due to lower OEM builds, rising raw material costs, particularly aluminum, and stringent emission regulations [2][8] Group 2: Supply Chain and Operational Challenges - Howmet Aerospace is vulnerable to supply-chain volatility, which has resulted in delays and increased costs in recent years, potentially affecting the timely delivery of products [3] Group 3: Aerospace Market Strength - Despite difficulties in the commercial transportation sector, Howmet Aerospace is benefiting from strong demand in the commercial and defense aerospace markets, particularly for F-35 engine spares and aerospace fastening systems [4][8] Group 4: Peer Comparison - ITT Inc.'s Motion Technologies segment is experiencing strong demand, with organic revenues rising 1.4% year-over-year in the first nine months of 2025, and expects overall organic sales to increase by 3-5% [5] - Kennametal Inc.'s Metal Cutting segment is also performing well, with a 3% year-over-year increase in organic revenues in the first three months of fiscal 2026, driven by increased aerospace OEM build rates and robust defense spending [6] Group 5: Financial Performance and Valuation - Howmet Aerospace's shares have increased by 84.7% over the past year, outperforming the industry growth of 36.1% [7] - The company is currently trading at a forward price-to-earnings ratio of 49.51X, which is above the industry average of 32.53X, and carries a Value Score of D [10]