Howmet Q4 Earnings Preview: Should You Buy the Stock Now or Wait?

Howmet Aerospace Inc. HWM is scheduled to release fourth-quarter 2025 results on Feb. 12, before market open. The Zacks Consensus Estimate for earnings is currently pegged at 97 cents per share on revenues of $2.14 billion.

The company’s fourth-quarter earnings estimates have increased a penny over the past 30 days. The bottom-line projection indicates an increase of 31.1% from the year-ago number. The Zacks Consensus Estimate for quarterly revenues indicates year-over-year growth of 13.2%.

Earnings Surprise History

Howmet has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.9%. In the last reported quarter, it delivered an earnings surprise of 4.4%.

Howmet Aerospace Inc. Price and EPS Surprise

Howmet Aerospace Inc. price-eps-surprise | Howmet Aerospace Inc. Quote

Earnings Whispers for HWM

Our proven model predicts an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

HWM has an Earnings ESP of +0.38% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note Ahead of Howmet’s Q4 Results

Howmet’s fourth-quarter results are anticipated to benefit from persistent strength in its commercial aerospace market. Solid demand in the air transport market has been driving demand for wide-body aircraft, thereby 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.

Growing popularity for new, more fuel-efficient aircraft with reduced carbon emissions and increased spare demand for engines are likely to have proven favorable for HWM in the fourth quarter. The Zacks Consensus Estimate for revenues from the commercial aerospace market is pegged at $1.14 billion, indicating a 14% rise from the year-ago quarter number.

Also, the company’s defense aerospace market has been playing a significant role in driving its overall growth, cushioned by steady government support. HWM is continuing to experience robust orders for engine spares for legacy fighters like the F-15 and the F-16. This is expected to have augmented its top-line performance in the to-be-reported quarter. The consensus estimate for revenues from the defense aerospace market is pegged at $365 million, indicating 19.7% growth from the year-ago quarter’s number.

However, Howmet has been facing weakness in the commercial transportation market served by the Forged Wheels segment, due to lower OEM builds and tariff-related impacts in North America. This is likely to have affected its fourth-quarter performance. The consensus estimate for revenues from the commercial transportation market is pegged at $279 million, indicating a 6.4% decline on a year-over-year basis.

Howmet is dependent on a global supply chain, and in recent years, it has experienced supply-chain disruptions in the aerospace sector that resulted in delays and increased costs. Despite moderation, the persistence of supply-chain issues in the aerospace sector is likely to have affected its operations and performance.

HWM’s Price Performance

HWM shares have gained 7.8% in the past three months compared with the Zacks Aerospace - Defense industry and the S&P 500’s growth of 5.6% and 1.7%, respectively. In comparison, the company’s peers, General Dynamics GD and RTX Corporation RTX have gained 2.2% and 9.4%, respectively, in the same period.

Three-Month Price Performance

Howmet’s Valuation Remains an Overhang

HWM is trading at a forward 12-month price-to-earnings (P/E) ratio of 49.65X, much higher than the industry average of 32.61X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours. In comparison with HWM’s valuation, its peers, General Dynamics and RTX Corp. are trading cheaper. Notably, General Dynamics and RTX Corp. are currently trading at 21.35X and 28.48X, respectively.

Price-to-Earnings (Forward 12 Months)

Investment Thesis

Howmet’s robust and diversified portfolio, along with strength in the commercial and defense aerospace markets, is expected to drive its long-term growth. Recently, the House of Representatives passed the fiscal year 2026 Defense Appropriations Act, providing a total discretionary allocation of $838.7 billion. Such robust budgetary provisions set the stage for Howmet, which remains focused on its defense business to win more contracts, which is likely to boost its top line.

However, persistent softness in the commercial transportation market remains concerning for its near-term performance. Also, the company’s expensive valuation warrants a cautious approach for existing investors.

Final Thoughts

Despite strong fundamentals, Howmet has been subject to some near-term challenges. Investors should monitor the developments pertaining to the stock closely for a more appropriate entry point, as an erroneous and hasty decision could affect portfolio gains. Therefore, it might be prudent to wait for HWM’s earnings report before making an investment decision.

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

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