HWM's Weakness in Transportation Market Prevails: What's the Road Ahead?

Howmet Aerospace Inc. HWM has been grappling with softness in its commercial transportation market. In the first six months of 2025, revenues from the commercial transportation market declined 9% on a year-over-year basis. The drop was primarily due to softer original equipment manufacturer (OEM) builds, particularly in the Forged Wheels segment. Management expects this weakness to persist through the second half of the year.

Rising raw material costs, particularly aluminum, and stringent emissions regulations are concerning for the segment. Also, reduced commercial truck production, due to tariff-related and economic uncertainty in North America, has been weighing on the company’s near-term performance.

As a global player, Howmet Aerospace remains vulnerable to supply-chain volatility, which has already led to delays and higher costs in recent years. These persistent supply-chain challenges in the transportation and aerospace sectors are expected to continue affecting the company’s ability to deliver finished products to customers within the stipulated time.

Despite difficult conditions in the commercial transportation market, Howmet Aerospace’s performance is being bolstered by sustained strength in the commercial and defense aerospace markets. Strong demand for engine spares for the F-35 program, aerospace fastening systems and airframe structural components further contributes to a promising outlook for the company.

Segment Snapshot of HWM’s Peers

Among its major peers, Textron Inc. TXT reported 5.4% sales growth in the second quarter of 2025. Revenues from Textron’s Aviation segment increased 2.8% year over year in the same period. The solid performance of Textron’s segment was primarily driven by higher aftermarket parts and services revenues, in addition to increased aircraft revenues.

Another peer, GE Aerospace GE, is riding on the solid demand for LEAP, GEnx & GE9X engines and services within the Commercial Engines & Services business. Revenues from GE Aerospace’s Commercial Engines & Services business jumped 30% year over year in second-quarter 2025. This growth is supported by increasing air traffic, fleet renewal and expansion activities. During the second quarter, GE Aerospace inked a deal with Qatar Airways to supply more than 400 GE9X and GEnx engines. It represents the largest widebody engine deal in the company’s history.

HWM's Price Performance, Valuation and Estimates

Shares of Howmet Aerospace have surged 98% in the past year compared with the industry’s growth of 14%.

From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 45.96X, above the industry’s average of 28.16X. Howmet Aerospace carries a Value Score of D.

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

Howmet Aerospace currently carries a Zacks Rank #2 (Buy). 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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