Howmet Aerospace Inc. (HWM): A Bull Case Theory

We came across a bullish thesis on Howmet Aerospace Inc. on X.com by qualitybargain. In this article, we will summarize the bulls’ thesis on HWM. Howmet Aerospace Inc.'s share was trading at $178.98 as of September 9th. HWM’s trailing and forward P/E were 52.33 and 41.15 respectively according to Yahoo Finance.

The recent Q2 results highlighted both positives and temporary headwinds for the company, ultimately reinforcing a long-term growth story. On the upside, spares revenue grew an impressive 40%, now accounting for 20% of total revenue, while Engine Products saw industrial acceleration driven by O&G and IGT. Engineered Structures benefited from footprint consolidation and product mix rationalization, supporting margins, and Forged Wheels held up better than expected. The company also raised FY25 capex guidance by $40 million, reflecting increased reinvestment in capacity supported by expected cash tax benefits.

Some near-term pressures were evident, particularly from de-stocking in Commercial Aerospace affecting Engineered Structures revenue and sequential declines in Fastener margins, largely due to tariff drag. While Q2 incremental margin came in at 61.3%, below the model of 66.9% and market expectations of 69%, revenue and EPS beats indicate overall resilience. Guidance suggests mid-40s incremental margins for 2H FY25, reflecting a recovery in Fasteners as timing and tariff effects normalize.

Looking ahead, the company’s investment in new capacity, operational leverage from headcount productivity, critical role in the hot section LLP supply chain, and early growth in IGT blades point to a structurally improving margin profile. As build rates rise, pricing benefits continue, and revenue growth accelerates, incremental margins could sustainably reach mid-40s by FY26–28 on high-single-digit revenue growth, above consensus expectations.

For investors, this positions the stock as a compelling long-term opportunity, with potential to reach ~30x forward multiple by FY27, driven by both top-line acceleration and margin expansion. Short-term noise aside, the underlying fundamentals support a strong, durable growth trajectory.

Previously we covered a bullish thesis on Axon Enterprise, Inc. (AXON) by RadnorCapital in March 2025, which highlighted rapid revenue growth, strong enterprise bookings, and deepening customer penetration with 123% net revenue retention. The stock has appreciated approximately 46.5% since our coverage as the thesis played out. The thesis still stands as Axon expands its market with drones and AI solutions. qualitybargain shares a contrarian but emphasizes Howmet Aerospace’s capacity investments, operational execution, and margin expansion, highlighting long-term growth despite near-term aerospace headwinds.

Howmet Aerospace Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held HWM at the end of the first quarter which was 58 in the previous quarter. While we acknowledge the potential of HWM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.