Key Takeaways HWM is set to report Q4 earnings on Feb. 12, with EPS seen up 31.1% and revenues projected to rise 13.2%.HWM is benefiting from strong commercial and defense aerospace demand, lifting engine and spare parts sales.HWM faces headwinds from weaker commercial transportation demand and lingering supply-chain challenges.Howmet Aerospace Inc. (HWM) is scheduled to release fourth-quarter 2025 results on Feb. 12, before market open. The Zacks Consensus Estimate for earnings is currently pegged at 97 ce ...

Core Insights - Howmet Aerospace Inc. (HWM) is experiencing significant growth in its defense aerospace market, with revenues increasing by 24% year over year in Q3 2025, driven by strong demand for engine spares related to the F-35 program and legacy fighter jets [1][8]. Group 1: Company Performance - HWM's Engineered Structures segment reported a 9% year-over-year revenue growth in the first nine months of 2025, supported by a solid pipeline of military aircraft programs and a robust defense budget [2]. - The company's shares have gained 8.3% over the past three months, outperforming the industry growth of 1.9% [7]. Group 2: Market Environment - The House of Representatives passed the fiscal year 2026 Defense Appropriations Act in July 2025, providing strong budgetary support for defense, which is favorable for HWM's business focus [3]. - Favorable geopolitical developments and consistent government support are enhancing HWM's ability to secure new contracts in the defense aerospace market [4]. Group 3: Competitive Landscape - Honeywell International Inc. (HON) reported organic sales growth of 10%, 13%, and 10% in its defense and space business for the first three quarters of 2025, driven by stable defense spending [5]. - Parker-Hannifin Corp.'s Aerospace Systems segment saw a 13.3% year-over-year revenue increase in Q1 of fiscal 2026, benefiting from strong demand in both commercial and military markets [6]. Group 4: Valuation and Estimates - HWM is currently trading at a forward price-to-earnings ratio of 55.55X, which is above the industry average of 44.73X, indicating a relatively high valuation [9]. - The Zacks Consensus Estimate for HWM's 2025 earnings has increased by 2.8% over the past 60 days, reflecting positive market sentiment [10].

Core Viewpoint - Howmet Aerospace Inc. is expected to report strong third-quarter results driven by robust demand in the commercial and defense aerospace markets, with earnings estimated at 91 cents per share and revenues of $2.05 billion, reflecting a year-over-year growth of 28.2% and 11.5% respectively [1][4][5]. Earnings Estimates - The Zacks Consensus Estimate for current quarter earnings is 91 cents per share, unchanged over the past week, with a slight increase from 90 cents 30 days ago [2]. - The earnings surprise history shows that Howmet has consistently outperformed estimates, with an average surprise of 7.1% over the last four quarters [2]. Market Demand Factors - Strong momentum in the commercial aerospace market is expected to benefit Howmet, driven by increased demand for wide-body aircraft and a rise in air travel [4]. - The commercial aerospace revenue estimate stands at $1.09 billion, indicating a 13.6% increase year-over-year [5]. - The defense aerospace market is also contributing significantly, with revenues estimated at $351 million, reflecting a 21.5% growth from the previous year [6][7]. Challenges - The commercial transportation market is facing challenges, with revenues expected to decline by 10% year-over-year to $279 million due to lower OEM builds and tariff impacts [7]. - Supply chain disruptions in the aerospace sector have led to delays and increased costs, which may affect overall performance [8]. Valuation and Performance - Howmet's shares have increased by 5.5% over the past three months, underperforming compared to the Zacks Aerospace - Defense industry and the S&P 500 [9]. - The company is trading at a forward P/E ratio of 48.07X, significantly higher than the industry average of 29.61X, which may pose risks if market sentiment declines [12]. Investment Outlook - The robust demand in both commercial and defense aerospace markets is expected to drive future performance, supported by significant government defense spending [15]. - However, near-term challenges such as weakness in the commercial transportation market and high valuation may limit growth prospects [16][17].

Core Insights - Howmet Aerospace Inc. (HWM) has seen its stock price increase by 87.7% over the past year, significantly outperforming the S&P 500 and industry growth rates of 18.4% and 22.6%, respectively [1][7] - The stock is currently trading near its 52-week high of $198.48, reflecting strong market sentiment and confidence in the company's financial health [4][7] Financial Performance - Aerospace revenues rose by 8% in Q2 2025, while defense sales surged by 21% due to strong F-35 engine orders [7][10] - Revenues from the commercial aerospace market accounted for 52% of HWM's business, increasing by 8% year over year in Q2 2025 [9] - The defense aerospace market also showed positive momentum, with revenues growing 21% year over year in Q2 2025, constituting 17% of total revenues [10] Shareholder Returns - HWM has been actively rewarding shareholders, paying $83 million in dividends and repurchasing $300 million in shares in the first half of 2025 [11] - The company increased its quarterly dividend by 20% to 12 cents per share in August 2025, marking its second dividend hike of the year [11] Market Challenges - The commercial transportation market has faced persistent weakness, with revenues declining by 4% year over year in Q2 2025 [13] - High input costs have impacted profitability, with the cost of goods sold rising by 7.3% year over year to $5.1 billion in 2024 [14] Valuation Metrics - HWM is trading at a forward P/E ratio of 46.53X, significantly higher than the industry average of 29.47X, which may pose risks if market sentiment declines [15] - Compared to peers, L3Harris Technologies and Textron are trading at lower P/E ratios of 25.77X and 13.06X, respectively [15] Earnings Estimates - The Zacks Consensus Estimate for HWM's 2025 earnings is $3.57 per share, indicating a year-over-year growth of 32.7% [17] - For 2026, the consensus estimate is $4.28 per share, suggesting a growth of 19.8% [17]