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Shares of Howmet (HWM) have been strong performers lately, with the stock up 10% over the past month. The stock hit a new 52-week high of $140.55 in the previous session. Howmet has gained 27.5% since the start of the year compared to the 0.9% move for the Zacks Aerospace sector and the 0.7% return for the Zacks Aerospace - Defense industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 13, 2025, Howmet reported EPS of $0.74 versus consensus estimate of $0.72 while it beat the consensus revenue estimate by 0.76%.
For the current fiscal year, Howmet is expected to post earnings of $3.22 per share on $8.07 billion in revenues. This represents a 19.7% change in EPS on an 8.65% change in revenues. For the next fiscal year, the company is expected to earn $4.03 per share on $9.07 billion in revenues. This represents a year-over-year change of 25.27% and 12.41%, respectively.
Valuation Metrics
Howmet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Howmet has a Value Score of D. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 43.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 17X. On a trailing cash flow basis, the stock currently trades at 40.9X versus its peer group's average of 14X. Additionally, the stock has a PEG ratio of 1.96. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Howmet currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.