Howmet Aerospace Surges 84.9% in a Year: Should Investors Ride the Rally?

Howmet Aerospace Inc.’s HWM shares have surged 84.9% in the past year, outpacing the industry and the S&P 500, which have returned 14.5% and 17.2%, respectively. The company has also outshone the Aerospace sector, which increased 21.9%, and its peers like GE Aerospace GE and RTX Corporation RTX, which have returned 58.2% and 31.5%, respectively, over the same time frame.

HWM Outperforms the Industry, S&P 500 & Peers

Closing at $176.80 on Wednesday, the stock is trading below its 52-week high of $193.26 but significantly higher than its 52-week low of $90.72. The stock is trading close to its 50-day moving average and way above its 200-day moving average, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.

Howmet Aerospace Shares’ 50-Day and 200-Day SMA

What’s Behind HWM Stock’s Momentum?

Howmet Aerospace is witnessing solid momentum in the commercial aerospace market, which remains the major driver for its performance. The strength in air travel continues, with wide-body aircraft demand picking up, supporting continued OEM spending. Pickup in air travel has been positive for the company as the increased usage of aircraft spurs spending on parts and products that it provides.

Revenues from the commercial aerospace market increased 8% year over year in the second quarter of 2025, constituting 52% of its business. The primary driver of HWM’s performance was attributed to increased demand for new, more fuel-efficient aircraft with reduced carbon emissions and increased spare demand for engines.

Howmet Aerospace is also benefiting from persistent strength in the defense business, cushioned by steady government support. HWM has been experiencing robust orders for engine spares for the F-35 program and other legacy fighters. Revenues from the defense aerospace market increased 21% year over year in the second quarter, constituting 17% of the company’s business.

It's worth noting that in July 2025, the House of Representatives passed the fiscal year 2026 Defense Appropriations Act, providing a total discretionary allocation of $831.5 billion. Such improved budgetary provisions set the stage for Howmet Aerospace, which is focused on the defense business, to win more contracts, which is likely to boost its top line.

Howmet Aerospace’s measures to reward shareholders are also encouraging. In the first six months of 2025, the company paid dividends of $83 million and repurchased shares worth $300 million. Also, in 2024, it paid dividends worth $109 million and repurchased shares for $500 million. 

In January 2025, Howmet Aerospace hiked its quarterly dividend by 25% to 10 cents per share. Also, in July 2024, its board approved an increase in the share repurchase program by $2 billion to $2.487 billion of its common stock. As of July 31, 2025, HWM’s total share repurchase authorization available was $1.8 billion.

The company’s sound liquidity position is an added positive. Exiting the second quarter, Howmet Aerospace’s cash equivalents and receivables were $545 million against short-term maturities of $5 million. While HWM generated net cash of $699 million from operating activities in the first six months of 2025, its healthy free cash flow totaled $478 million.

Earnings Estimate Revision

Earnings estimates for HWM have moved north over the past 60 days, reflecting analysts’ optimism.

The Zacks Consensus Estimate for 2025 earnings is pegged at $3.57 per share, indicating an increase of 3.2% in the past 60 days. The figure indicates year-over-year growth of 32.7%. The consensus mark for 2026 earnings is pinned at $4.28 per share, increasing 4.4% in the same period. The figure also indicates year-over-year growth of 19.8%.

Valuation Remains an Overhang

Howmet Aerospace is trading at a forward 12-month price-to-earnings (P/E) ratio of 44.09X, higher than the industry average of 27.88X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours. In comparison with HWM’s valuation, its peers, GE Aerospace and RTX Corp., are trading cheaper. Notably, GE Aerospace and RTX Corp. are currently trading at 41.24X and 24.45X, respectively.

Should You Invest in HWM Stock Now?

Persistent strength across both the commercial and defense aerospace markets, supported by strong build rates, spare demand for engines and a high defense budget, positions Howmet Aerospace favorably for impressive growth in the quarters ahead. Built on a sound liquidity position, HWM’s shareholder-friendly policies also add to its appeal.

Despite its expensive valuation, positive analyst sentiment and robust growth prospects indicate it is the appropriate time for potential investors to bet on this Zacks Rank #1 (Strong Buy) company. 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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