Howmet's Margins Expand Despite Rising Costs: Will the Momentum Sustain?

Core Insights - Howmet Aerospace Inc. (HWM) is facing rising costs and expenses, with a reported 8.9% year-over-year increase in cost of sales during Q3 2025 due to higher input costs and net headcount [1][8] - Despite these rising costs, HWM has achieved margin expansion, reporting an adjusted EBITDA margin of 29.4% in Q3 2025, a 290-basis point improvement year-over-year [2][8] - The company has raised its 2025 adjusted EBITDA margin guidance to 29%, up from the previous estimate of 28.5-28.6%, driven by strong pricing and productivity gains [4][8] Financial Performance - HWM's adjusted EBITDA margins improved across its segments: Engine Products (80 basis points), Fastening Systems (480 basis points), and Engineered Structures (510 basis points) [3] - In comparison, GE Aerospace's cost of sales surged 24.7% year-over-year in Q3 2025, while its adjusted operating profit increased by 26.5% [5] - RTX Corp. reported a 10% year-over-year increase in total costs and expenses, amounting to $20 billion in Q3 2025, with an adjusted operating profit of $2.97 billion [6] Market Position - HWM's stock has increased by 79% over the past year, outperforming the industry growth of 35.5% [7] - The company is currently trading at a forward price-to-earnings ratio of 50.36X, which is above the industry average of 33.02X [9] - The Zacks Consensus Estimate for HWM's 2025 earnings has remained stable over the past 60 days, with current estimates at $3.69 per share [10][11]