Can Howmet Aerospace Maintain Its EBITDA Margin Expansion Streak?

Howmet Aerospace Inc. HWM has consistently delivered margin expansion in recent quarters, reflecting its commitment to sustaining long-term profitability. The company’s adjusted EBITDA margin improved from 26.5% in the third quarter of 2024 to 26.8% in the fourth quarter and further to 28.8% in the first quarter of 2025. In the second quarter of 2025, HWM reported an adjusted EBITDA margin of 28.7%, up 300 basis points year over year.

In the second quarter, its cost of goods sold rose 6.1% year over year, but an 8.2% drop in SG&A expenses supported profitability. The Engine Products, Fastening Systems and Engineered Structures segments recorded adjusted EBITDA margin expansions of 200, 360 and 690 basis points, respectively, driven by manufacturing footprint optimization and an improved product mix. Robust pricing, disciplined cost management and operational efficiency continue to support Howmet Aerospace’s margin performance despite higher production costs.

Strong momentum in commercial and defense aerospace markets is also boosting Howmet Aerospace’s performance. Robust orders for engine spares for the F-35 program and aerospace fastening systems also augur well.

Driven by strength across its businesses, HWM has raised its 2025 guidance for adjusted EBITDA margin. The company now expects adjusted EBITDA margin to be between 28.5% and 28.6% in 2025 compared with 27.8-28.2% projected earlier. This raise shows HWM’s confidence in keeping margins strong and delivering solid performance for the rest of the year.

Margin Performance of HWM’s Peers

Among its major peers, RTX Corporation’s RTX total costs and expenses increased 6.4% year over year to $19.48 billion in the second quarter of 2025. RTX Corp. generated an adjusted operating profit of $2.79 billion. RTX Corp.’s Collins Aerospace segment’s adjusted operating profit totaled $1.25 billion compared with $1.15 billion in the year-ago quarter.

GE Aerospace’s GE cost of sales surged 22.8% year over year in the second quarter of 2025. However, GE Aerospace’s adjusted operating profit increased 23% year over year. However, GE Aerospace’s adjusted operating margin was down 10 basis points year over year.

HWM's Price Performance, Valuation and Estimates

Shares of Howmet Aerospace have surged 95.1% in the past year compared with the industry’s growth of 16%.

From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 45.59X, above the industry’s average of 27.64X. Howmet Aerospace carries a Value Score of F.

The Zacks Consensus Estimate for HWM’s earnings has been on the rise over the past 60 days.

The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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