Key Stats for Howmet Stock
- Earnings Reaction: +2.21%
- Current Price: $258.10
- Valuation Model Target: $306.42
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What Happened?
Howmet Aerospace (HWM) shares edged higher following its latest earnings report, gaining 2.21% on its reporting date to close at $258.10.
The engineered metal products manufacturer delivered an exceptionally strong fourth quarter performance.
Revenue reached $2.17 billion, successfully beating the Wall Street consensus estimate of $2.13 billion.
The company also reported an Adjusted EPS of $1.05, comfortably surpassing the $0.97 expectation.
This steady market reaction reflects Howmet’s critical position within a highly constrained global aerospace supply chain.
Commercial aircraft manufacturers are facing massive production backlogs, forcing airlines to fly their existing fleets longer than originally planned.
This aging global fleet has triggered an unprecedented boom in high-margin engine spare parts.
In addition to aviation, Howmet is capitalizing heavily on the artificial intelligence infrastructure buildout.
The company manufactures specialized turbine blades for the land-based gas turbines used by utility companies.
Because data centers require immense amounts of reliable power, utilities are aggressively expanding their natural gas generation capacity.
See analysts’ growth forecasts and price targets for Howmet stock (It’s free!) >>>
Is Howmet Undervalued Today?
The TIKR Model indicates that the market is still slightly underpricing the company’s compounding cash flow and expanding addressable markets.
The model projects a target price of $306.42, representing a solid 18.7% upside from current levels.
During the earnings call, CEO John Plant highlighted the structural deficit in aircraft production that guarantees a long runway for Howmet’s core business.
Plant stated verbatim: “Passenger demand combined with the recent multiyear underbuild of commercial aircraft has together led to a record OEM backlog stretching into the next decade.“
CFO Patrick Winterlich also clarified the massive secondary catalyst driving their industrial segments forward.
Winterlich added verbatim: “Gas turbine growth is driven by the increased demand for electricity generation, especially from natural gas for data centers.“
Read the full Howmet Aerospace Transcript on TIKR to see the revenue breakdown >>>
Valuation Deep Dive
The TIKR Advanced Valuation Model identifies Howmet Aerospace as a premier industrial compounder perfectly positioned across two massive infrastructure megatrends.
- Target Price: $306.42
- Current Price: $258.10
- Annualized Return: 3.6%
The Spares Supercycle: Howmet’s profitability is heavily driven by its replacement parts business. The combination of commercial aerospace, defense aerospace, and gas turbine spares grew a massive 33% for the full year. These aftermarket sales now represent 21% of total revenue, structurally elevating the company’s overall EBITDA margin to a record 30.1% exit rate.
Aggressive Capital Returns: The company operates with an incredibly lean balance sheet, bringing its net debt to trailing EBITDA ratio down to a record low of 1.0x. This financial flexibility allowed management to convert 93% of net income into free cash flow. In turn, Howmet rewarded shareholders with $700 million in stock repurchases and a 69% increase in dividend payouts over the last year.
Conclusion: A flawless execution story at a premium valuation. With a projected 18.7% total return potential, Howmet Aerospace offers investors a highly defensive growth vehicle. The path to $306 is secured by a decade-long aircraft production backlog, a booming power generation market, and an aggressive share buyback program.
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How Much Upside Does Howmet Stock Have From Here?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
