HWM

Industrials

Howmet Aerospace

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Market Data

Financials

XBRL · SEC EDGAR

2011–2025(15yr)

Revenue

Net Income

Free CF

Metric	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$25.0B	$23.7B	$23.0B	$23.9B	$22.5B	$12.4B	$13.0B	$14.0B	$14.2B	$5.3B	$5.0B	$5.7B	$6.6B	$7.4B	$8.3B	+11.1%
Gross Profit	$4.5B	$3.2B	$3.7B	$4.8B	—	—	$2.7B	$2.6B	$3.0B	$1.4B	$1.4B	$1.6B	$1.9B	$2.3B	$2.8B	+22.0%
Gross Margin	17.9%	13.6%	16.3%	19.9%	—	—	21.1%	18.7%	20.9%	26.3%	27.7%	27.5%	28.1%	31.1%	34.2%	+3.1pp
Operating Income	—	—	—	—	$628.0M	$819.0M	$326.0M	$1.3B	$1.0B	$626.0M	$748.0M	$919.0M	$1.2B	$1.6B	$2.0B	+25.3%
Operating Margin	—	—	—	—	2.8%	6.6%	2.5%	9.5%	7.3%	11.9%	15.0%	16.2%	18.1%	22.0%	24.8%	+2.8pp
Net Income	$611.0M	$191.0M	-$2.3B	$268.0M	-$322.0M	-$941.0M	-$74.0M	$642.0M	$470.0M	$261.0M	$258.0M	$469.0M	$765.0M	$1.2B	$1.5B	+30.6%
Net Margin	2.4%	0.8%	-9.9%	1.1%	-1.4%	-7.6%	-0.6%	4.6%	3.3%	5.0%	5.2%	8.3%	11.5%	15.5%	18.3%	+2.7pp
Free Cash Flow	$906.0M	$236.0M	$385.0M	$455.0M	$402.0M	-$255.0M	$105.0M	-$551.0M	-$180.0M	-$258.0M	$250.0M	$540.0M	$682.0M	$977.0M	$1.4B	+46.5%
FCF Margin	3.6%	1.0%	1.7%	1.9%	1.8%	-2.1%	0.8%	-3.9%	-1.3%	-4.9%	5.0%	9.5%	10.3%	13.1%	17.3%	+4.2pp
EPS (Diluted)	$0.55	$0.18	$-2.14	$0.21	$-0.31	$-2.31	$-0.28	$1.30	$1.03	$0.60	$0.59	$1.11	$1.83	$2.81	$3.71	+32.0%

Total Debt$3.0B

Cash & Equiv.$742.0M

Net Debt$2.3B

3 min read

1. THE BIG PICTURE

Howmet Aerospace has successfully positioned itself as an essential, high-moat provider for the aerospace industry, controlling the production of 90% of structural and rotating engine components. However, Howmet Aerospace has transitioned into a "priced-for-perfection" stock; while its technical dominance is clear, its valuation is now nearly double that of its diversified industrial peers, despite facing significant cyclical and customer-specific risks.

2. WHERE THE RISKS HIT HARDEST

Howmet’s "wingtip to wingtip" vertical integration is threatened by "captive competition" because major customers like GE Aerospace and RTX maintain their own superalloy furnaces for producing investment castings (Competitive Position). This structural vulnerability is compounded by customer concentration; quality control issues or labor stoppages at Boeing—a key customer—directly impact Howmet’s financial performance and production timing (Risks). Furthermore, the planned $1.8 billion acquisition of CAM introduces integration risks that could strain Howmet Aerospace's capital structure just as it attempts to navigate the cyclical sensitivities of the commercial transportation market (Risks).

3. WHAT THE NUMBERS SAY TOGETHER

Howmet’s 18.5% net margin is the second-highest among its peer group, yet its dividend and buyback yields (0.2% and 0.6%, respectively) are among the lowest (Peer Benchmarking). This indicates that management is prioritizing aggressive capital deployment—specifically the Brunner and CAM acquisitions—over immediate cash returns to shareholders. While TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth stands at 11.1%, the most recent quarter saw an acceleration to 15%, fueled by a 32% surge in gas turbines and a 20% increase in Engine Products (Recent Results). With short interest at 3.6% of the float, there is a measurable level of market skepticism regarding whether this growth acceleration is a structural shift or a cyclical peak (Supplemental Signals).

4. IS IT WORTH IT AT THIS PRICE?

At 46.3x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Howmet trades at a 65% premium to the peer median of 28.0x. The market is currently pricing in approximately 8.9% long-term growth (CAPM analysis). While Howmet Aerospace's 25.0% operating margin justifies a premium over RTX (10.3%) or Honeywell (17.4%), the current price leaves no margin for error. If long-term growth were to slow to 5%, the justified multiple would drop to 16.6x—representing significant downside from current levels (CAPM analysis). This valuation is supported by a record OEM backlog stretching into the next decade, but it assumes Howmet can maintain its competitive edge against low-cost international suppliers in the wheel market and captive threats in the engine market.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin (currently 13.4%) fails to expand alongside revenue growth, suggesting that the $1.8 billion CAM acquisition is creating higher-than-expected integration costs or capital requirements.
Constructive if the commercial transportation market recovers from its projected early-2026 "low point," allowing the Forged Wheels segment to contribute more meaningfully to the 30.3% EBITDAEBITDAEarnings Before Interest, Taxes, Depreciation & Amortization — a rough proxy for operating cash profit, stripping out accounting adjustments margin target.
Cautious if major customers like GE Aerospace or RTX increase their internal "captive" furnace capacity, signaling a reduced reliance on Howmet’s proprietary casting processes.

6. BOTTOM LINE

Structural Advantage: High-barrier technical moats in superalloy casting and a portfolio of over 2,600 patents and trademarks that make Howmet Aerospace a near-sole-source provider for mission-critical aerospace components.

Bottom Line: Howmet is an operationally elite business, but its current valuation demands flawless execution in a cyclical industry prone to sudden supply chain and regulatory disruptions.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Cyclical Market Sensitivity: Howmet Aerospace derives a significant portion of revenue from the aerospace and commercial transportation industries, which are sensitive to global economic conditions, interest rates, and airline profitability. Changes in OEM production timing or defense spending priorities can cause actual results to deviate from projections.
Manufacturing Disruptions: Complex production processes are vulnerable to equipment failure, natural disasters, or labor shortages. Interruptions force Howmet Aerospace to incur premium freight costs, make substantial capital expenditures, or purchase alternative materials at higher prices.
Supply Chain Concentration: Howmet Aerospace relies on limited or sole-source suppliers for essential materials like titanium sponge and specialized metal alloys. Constraints at these suppliers—due to capacity issues or labor shortages—can prevent Howmet Aerospace from meeting customer demand.
Customer Concentration and Performance: Quality control issues or labor stoppages at key customers, such as the production rate impacts seen at The Boeing Company, directly affect Howmet Aerospace’s financial performance.
Acquisition Integration: The planned $1.8 billion acquisition of CAM is subject to regulatory approvals and financing risks. Failure to realize anticipated synergies or successfully integrate the business could divert management attention and increase operating costs.

2. Company-Specific Risks

Titanium Revert Dependency: Howmet Aerospace faces increased costs if customers fail to return titanium revert (reusable scrap), forcing Howmet Aerospace to purchase new titanium at inflated market prices.
Pension Funding Volatility: Howmet Aerospace’s financial condition is sensitive to actuarial assumptions regarding the discount rate and the long-term rate of return on pension assets; adverse market conditions can lead to a decline in funded status and require higher-than-expected cash contributions.
AI Implementation Risks: The use of artificial intelligence in manufacturing and operations presents risks of intellectual property loss, inaccurate or nonsensical results, and potential legal liability if confidential data is improperly handled.
Separation Indemnities: Howmet Aerospace remains party to separation agreements with Alcoa Corporation and Arconic Corporation; if these counterparties fail to satisfy their indemnification obligations, Howmet Aerospace may be required to bear those losses.

3. Regulatory/Legal Risks

Government Contracting: A portion of revenue is derived from U.S. and foreign government contracts, which are subject to strict procurement laws. Non-compliance can result in contract termination, forfeiture of profits, or suspension from future government work.
Global Trade and Tariffs: Howmet Aerospace is exposed to volatile trade landscapes, including 2025 and 2026 U.S. executive orders regarding tariffs and retaliatory countermeasures, which impact the cost of raw materials and manufacturing.
Environmental Liabilities: Howmet Aerospace is subject to stringent health, safety, and environmental laws. Howmet Aerospace faces potential costs related to site cleanups, remediation obligations, and compliance with evolving climate-related regulations, such as potential carbon pricing.
Product Liability: The manufacture of aerospace and industrial components exposes Howmet Aerospace to potential lawsuits, recalls, and regulatory enforcement actions if products are perceived as defective or fail to meet safety specifications.

4. Financial Impact Map

Cyclical Market Sensitivity → Revenue → Fluctuations in aircraft production rates and defense spending directly impact top-line results. Manufacturing Disruptions → Operating Expenses → Costs increase due to premium freight, emergency capital expenditures, and higher-cost alternative material sourcing. Supply Chain Concentration → Cost of Goods Sold → Reliance on sole-source suppliers for titanium and alloys can force purchases at unfavorable market prices. Customer Concentration → Revenue → Production delays or labor strikes at key customers like Boeing directly reduce demand for Howmet Aerospace products. Acquisition Integration → Liquidity and Debt → The $1.8 billion cash purchase price requires financing through debt facilities or commercial paper, impacting Howmet Aerospace’s capital structure and interest expense.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
10-K	Feb 2026	Dec 2025
8-K	Feb 2026	—
10-Q	Oct 2025	Sep 2025
14A	Apr 2025	—