HWM Q4 Deep Dive: Aerospace, Defense, and Gas Turbines Drive Growth, Capital Deployment Expands

Aerospace and defense company Howmet (NYSE:HWM) announced better-than-expected revenue in Q4 CY2025, with sales up 14.6% year on year to $2.17 billion. On top of that, next quarter’s revenue guidance ($2.24 billion at the midpoint) was surprisingly good and 3.5% above what analysts were expecting. Its non-GAAP profit of $1.05 per share was 8.7% above analysts’ consensus estimates.

Is now the time to buy HWM? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Howmet’s fourth quarter saw a strong positive market reaction, reflecting performance that surpassed Wall Street’s revenue and profit expectations. Management attributed this to robust demand in commercial and defense aerospace, alongside accelerating growth in gas turbines. CEO John Plant highlighted the significant contribution of engine spares and the company’s ability to outpace broader market trends in premium product segments. Notably, commercial aerospace engine spares and gas turbine orders were major revenue drivers, supported by ongoing investments in manufacturing capacity and operational improvements.

Management’s outlook for next year centers on sustained growth in its core markets and ongoing capital deployment to expand production capacity. CEO John Plant emphasized plans to increase investment in new manufacturing facilities and automation, especially to meet demand for gas turbines and aerospace components. Plant noted, “We are deploying capital for new equipment at an extraordinary rate,” while also acknowledging the operational complexity of bringing multiple new plants and acquisitions online. The company expects ongoing demand from spares and new builds to underpin revenue, but flagged potential near-term margin pressure from startup costs and labor ramp-up.

Key Insights from Management’s Remarks

Management identified surging demand for aerospace and gas turbine products, operational efficiency, and ongoing investment in capacity as the primary drivers of the quarter’s growth.

• Engine spares surge: Strong year-on-year growth in engine spares across commercial and defense aerospace drove significant revenue gains, with spares now representing over 21% of total revenue. Management cited both aging fleets and higher utilization as key demand factors.
• Gas turbines gain momentum: The gas turbine segment experienced accelerating growth, driven by electricity demand from data centers and a shift toward natural gas power generation. Howmet has secured new contracts with four major turbine customers and is investing in additional capacity.
• Manufacturing expansion: The company invested heavily in new and expanded manufacturing facilities, particularly in Japan, Europe, and the U.S., to support growing demand across its product portfolio. Management expects these investments to yield higher output starting late next year.
• Automation and operational improvements: Recent automation initiatives and digital manufacturing enhancements have improved efficiency, especially in the Engine Products segment. Management pointed to ongoing opportunities to further automate operations as capacity additions stabilize.
• Acquisitions broaden portfolio: Howmet closed a bolt-on acquisition in the fastener segment and announced a larger $1.8 billion deal for an aerospace fittings business, both aimed at expanding product offerings and entering adjacent markets. Management views these as platforms for future growth rather than near-term earnings drivers.

Drivers of Future Performance

Management expects continued growth in key markets, supported by capacity investments, but warns that ramp-up costs and integration of acquisitions could pressure margins.

• Rising capital expenditures: Ongoing investment in manufacturing capacity—particularly for engines and gas turbines—is expected to support high-single-digit revenue growth, but will bring start-up costs and require substantial hiring and training.
• Demand for spares and new builds: Management anticipates persistent demand for engine spares and new aircraft builds, with commercial and defense aerospace backlogs supporting multi-year growth. Expansion in the gas turbine market, serving both utilities and data centers, is expected to double segment revenue over the next 3–5 years.
• Margin headwinds from ramp-up: The addition of new manufacturing plants and integration of recent acquisitions are expected to cause near-term operating margin pressure. Management is focused on yield improvement and operational efficiency to offset these costs over time.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will closely watch (1) the ramp-up and output of new manufacturing facilities, (2) integration progress and revenue contribution from recent acquisitions, and (3) sustained demand for spares and gas turbine products, particularly as utility and data center clients expand. Automation milestones and margin stabilization will also be key indicators of execution.

Howmet currently trades at $242.97, up from $230.85 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

Our Favorite Stocks Right Now

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.