Howmet Aerospace Stock Crosses 50-Day SMA: Should You Buy Now?

Howmet Aerospace Inc. HWM crossed its 50-day simple moving average (SMA) on Sept. 10, reaching a key support level from a technical perspective. The stock is also trading 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.

HWM Overtakes the 50-Day Moving Average

Considering the past several months’ price movement, the stock was seen outperforming the benchmarks, the broader industry and its major peers. Over the past six months, shares of the company have surged 43.7%, while the Zacks Aerospace - Defense industry and the S&P 500 increased 21.7% and 17.5%, respectively.

Shares of Howmet Aerospace’s key rivals like RTX Corporation RTX and General Dynamics Corporation GD have risen 21.1% and 24.2%, respectively.

6-Month Price Performance

Closing at $183.80 in the last trading session, the stock is trading below its 52-week high of $193.26 but significantly higher than its 52-week low of $92.77. With investors’ sentiment starting to pick up for Howmet Aerospace, it is the right time to assess the stock’s potential upside. Let’s delve deeper.

Strength in Commercial Aerospace Market: The strongest driver of Howmet Aerospace’s business at the moment is the commercial aerospace market. The strength in air travel continues, as it has through 2024, with wide-body aircraft demand picking up, supporting continued OEM spending. Pickup in air travel has been favorable 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. Also, in the first quarter, revenues from the market increased 9% year over year. The sustained strength was attributed to new, more fuel-efficient aircraft with reduced carbon emissions and increased spare demand for engines.

Robust Defense Budget: While the commercial aerospace market has remained the major driver for the company, the defense side of the industry has also been witnessing positive momentum, cushioned by steady government support. Howmet Aerospace has been witnessing robust orders for engine spares for the F-35 program and other legacy fighters. In the second quarter, revenues from the defense aerospace market surged 21% year over year, constituting 17% of the company’s revenues. Also, in the first quarter, revenues from this market increased 19% year over year.

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.

Shareholder-Friendly Policies: Howmet Aerospace remains committed to rewarding its shareholders handsomely. 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, the quarterly dividend was hiked 25% to 10 cents per share. Also, in July 2024, HWM’s board approved an increase in the share repurchase program by $2 billion to $2.487 billion of its common stock. Exiting the second quarter, HWM’s total share repurchase authorization available was $1.8 billion.

Sound Liquidity Position: The company’s sound liquidity position adds to its strength. Exiting the second quarter, Howmet Aerospace’s cash equivalents and receivables were $545 million, much higher than its short-term maturities of $5 million. In the first six months of the year, HWM generated net cash of $699 million from operating activities, while its 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 2.9% 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 3.4% in the same period. The figure indicates year-over-year increase of 19.8%.

Stock Valuation

Howmet Aerospace is trading at a forward 12-month price-to-earnings (P/E) ratio of 45.22X, higher than the industry average of 27.53X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours. 

In comparison with HWM’s valuation, its peers, RTX Corp. and General Dynamics, are trading cheaper. Notably, RTX Corp. and General Dynamics are currently trading at 24.17X and 19.58X, respectively.

Final Take on HWM

Robust momentum across the commercial and defense aerospace markets, driven by solid build rates, wide-body aircraft recovery and increased defense budget, positions Howmet Aerospace favorably for strong growth in the quarters ahead. Given the persistent strength across most of its served markets, HWM has built a sound liquidity position that supports its shareholder-friendly policies.

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

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

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