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Howmet Aerospace Inc.’s HWM shares have surged 96.1% in the past year, outpacing the industry and the S&P 500, which have returned 4.9% and 8.1%, respectively. The company has also outshone the Aerospace sector, which increased 8.8%, and its peers like GE Aerospace GE and Textron Inc. TXT, which have returned 19.2% and 13.7%, respectively, over the same time frame.
HWM Outperforms the Industry, S&P 500 & Peers
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Closing at $124.47 on Tuesday, the stock is trading below its 52-week high of $140.55 but significantly higher than its 52-week low of $62.80. The stock is trading close to its 50-day moving average and way above its 200-day moving average, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.
HWM Shares’ 50-Day and 200-Day SMA
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What’s Driving the Stock?
The strongest driver of Howmet’s business at the moment is the commercial aerospace market. The strength in air travel continues, as it has through 2024, with wide-body aircraft demand also picking up, supporting continued OEM spending. Pickup in air travel is generally positive for the company because the increased usage of aircraft spurs spending on parts and products that it provides and also encourages airlines to buy more aircraft, which again drives its sales.
Revenues from the commercial aerospace market increased 12.9% year over year in the fourth quarter of 2024, constituting 53% of its business. The sustained strength was attributed to new, more fuel-efficient aircraft with reduced carbon emissions and increased spare demand for engines. The Boeing Company BA is also anticipated to witness a gradual production recovery, particularly in the Boeing 737 MAX aircraft, with an end to its workers’ strike, which is likely to boost demand for Howmet’s products in the market.
Howmet is also benefiting from positive momentum of the defense business, cushioned by steady government support. HWM has been experiencing robust orders for engine spares for the F-35 program and other legacy fighters. Revenues from the defense aerospace market increased 22% year over year in the fourth quarter, constituting 16% of the company’s business.
It's worth noting that in August 2024, the U.S. Senate Committee on Appropriations approved the fiscal year 2025 Defense Appropriations Act, which provides $852.2 billion in total funding. This reflects a 3.3% increase over the approved funding during fiscal 2024. Such improved budgetary provisions set the stage for Howmet, which is focused on the defense business to win more contracts, which is likely to boost its top line.
Driven by strength across its businesses, Howmet expects to generate revenues in the range of $7.93-$8.13 billion in 2025, indicating year-over-year growth of 8% at the midpoint.
The company also remains committed to rewarding shareholders handsomely through dividend payouts and share buybacks. In 2024, Howmet paid dividends worth $109 million and repurchased shares for $500 million. In January 2025, the company hiked its dividend by 25% to 10 cents per share (annually: 40 cents). Also, in July 2024, its board approved an increase in the share repurchase program by $2 billion to $2.487 billion of its common stock. Exiting January 2025, HWM’s total share repurchase authorization available was $2.15 billion.