Howmet Aerospace's Margins Continue to Expand: Can the Momentum Sustain?

Howmet Aerospace Inc. HWM has steadily expanded its adjusted EBITDA margin over the last four quarters, reflecting consistent operational execution. From 25.7% reported in the second quarter of 2024, the margin rose to 26.5% in the third quarter and reached 26.8% in the fourth quarter. In the first quarter of 2025, HWM reported an adjusted EBITDA margin of 28.8%, up 480 basis points, driven by pricing strength and productivity gains.

Strong momentum in the commercial and defense aerospace markets continues to support Howmet Aerospace’s performance. Robust orders for engine spares for the F-35 program, aerospace fastening systems and airframe structural components also augur well. In 2024, Howmet Aerospace’s cost of goods sold rose 7.3% on a year-over-year basis while in the first quarter of 2025 the metric remained flat. SG&A expenses also decreased slightly in the first quarter compared with the prior year, contributing to improved profit margins.

Despite challenging conditions in the commercial transportation market, Howmet Aerospace’s ability to expand margins shows its focus on operational execution and cost management actions. HWM’s strong operational efficiency, solid demand outlook and supply-chain management efforts suggest that it is well positioned to maintain margin strength and deliver sustained growth in the near term.

Margin Performance of HWM’s Peers

Among its major peers, RTX Corporation’s RTX total costs and expenses increased 2.6% year over year to $18.28 billion in the first quarter of 2025. RTX Corp. generated an adjusted operating profit of $2.66 billion. Despite a rise in operating expenses, RTX Corp.’s adjusted operating margin was 13.1%, up 120 basis points, driven by cost-reduction initiatives and productivity improvements.

GE Aerospace’s GE cost of sales grew 4.3% year over year to $6 billion in the first quarter of 2025. However, GE Aerospace’s adjusted operating profit increased 38.4% year over year. GE Aerospace’s adjusted operating margin increased 460 basis points to 23.8%, driven by improved pricing and favorable customer mix.

HWM's Price Performance, Valuation and Estimates

Shares of Howmet Aerospace have surged 138.4% in the past year compared with the industry’s growth of 18.6%.

From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 49.13X, above the industry’s average of 26.77X. Howmet Aerospace carries a Value Score of F.

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

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

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

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