HWM

Howmet Aerospace has delivered very strong share price gains over the past five years, while both an intrinsic value estimate based on a Discounted Cash Flow (DCF) approach and market multiples currently point to an expensive stock. For investors, the question is whether the recent price leaves enough room for error if expectations ease. Howmet Aerospace has returned roughly 7.6x over 5 years, which puts extra focus on whether the current price already reflects most of the good news that investors expect. The valuation story now hinges on how far the company can grow cash flows from its aerospace and industrial components portfolio, while any setback in execution or weaker cash conversion could pressure what investors are willing to pay. The broader checks give Howmet Aerospace a low value score, with 1 out of 6 indicators suggesting a bargain, which leans toward a stock that is not obviously cheap at current levels. The issue now is whether Howmet Aerospace's recent share price strength is running ahead of what its intrinsic value and fundamentals can support over time. Broaden your watchlist beyond Howmet Aerospace by exploring stocks that combine quality fundamentals with balance sheet strength through our hand picked solid balance sheet and fundamentals stocks screener (51 results) The Discounted Cash Flow (DCF) model used here values Howmet Aerospace based on projected free cash flows to shareholders over time. On this view, the latest twelve month free cash flow is about $1.8b, and the model assumes that cash flows continue to grow from this level rather than contract. Feeding those projections into the 2 Stage Free Cash Flow to Equity model gives an estimated intrinsic value of about $219 per share. Compared with the current share price, the DCF implies the stock is roughly 20.8% overvalued. This suggests the market is already putting a full price on Howmet Aerospace's expected cash generation. On this cash flow view, Howmet Aerospace stock currently screens as overvalued. Our Discounted Cash Flow (DCF) analysis suggests Howmet Aerospace may be overvalued by 20.8%. Discover 44 high quality undervalued stocks or create your own screener to find better value opportunities. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Howmet Aerospace. P/E is usually the cleanest way to compare Howmet Aerospace with other profitable aerospace stocks because it ties the share price directly to reported earnings. On this measure, Howmet Aerospace trades on about 56.5x earnings, which is well above the Aerospace & Defense industry average of roughly 36.9x and the peer group average of about 35.0x. The fair P/E suggested by the model is around 36.5x, which already factors in the company’s profile, sector, and risk characteristics. The gap between this fair ratio and the current 56.5x points to a rich valuation, since investors today are paying a premium multiple compared with what the fundamentals in this framework would justify. On the P/E multiple alone, Howmet Aerospace stock currently looks overvalued compared with both its industry and the model’s fair ratio. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Howmet Aerospace pick up where this valuation puzzle leaves off by spelling out what future growth, margins and earnings would need to look like for the stock to be worth materially more or less than today’s price on the Community page. Each narrative ties a fair value to a clear story about Howmet Aerospace's possible catalysts and risks so you can see over time which version of events appears closer to reality. One of the top community narratives on Howmet Aerospace: 19% undervalued Read one of the top narratives on Howmet Aerospace Do you think there's more to the story for Howmet Aerospace? Head over to our Community to see what others are saying! For Howmet Aerospace, both the Discounted Cash Flow (DCF) estimate and the rich P/E multiple point to a stock that currently screens as overvalued rather than obviously underappreciated. The broader valuation checks are also weak, which reinforces the idea that expectations are already high after a very strong five year run. The key question from here is whether Howmet Aerospace can deliver the cash flow growth and margins that are implicitly reflected in today’s price. If those expectations ease or execution slips, the current valuation leaves limited room for disappointment. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include HWM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Howmet’s second quarter was marked by broad-based growth across its end markets, with management highlighting strong demand from both commercial and defense aerospace customers as well as the industrial gas turbine segment. The company’s leadership attributed the performance to increased aircraft build rates, elevated spares activity, and a recovery in commercial transportation. CEO John Plant emphasized that organic growth remained robust even after accounting for recent acquisitions, with spares revenue now representing a larger portion of sales than in prior years. Plant noted, “Commercial aerospace growth was strong at 28%, driven by demand for both new builds and spares.” Is now the time to buy HWM? Find out in our full research report (it’s free). Revenue: $2.55 billion vs analyst estimates of $2.43 billion (24.1% year-on-year growth, 4.9% beat) Adjusted EPS: $1.33 vs analyst estimates of $1.25 (6.7% beat) Adjusted EBITDA: $817 million vs analyst estimates of $773 million (32.1% margin, 5.7% beat) The company lifted its revenue guidance for the full year to $10.05 billion at the midpoint from $9.65 billion, a 4.1% increase Management raised its full-year Adjusted EPS guidance to $5.27 at the midpoint, a 6.7% increase EBITDA guidance for the full year is $3.23 billion at the midpoint, above analyst estimates of $3.12 billion Operating Margin: 27.9%, up from 25.4% in the same quarter last year Market Capitalization: $112.3 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Sheila Kahyaoglu (Jefferies) pressed CEO John Plant on Howmet’s technology advantage and ability to support IGT capacity ramps. Plant responded that market share and new investments should enable Howmet to meet demand, with further gains expected from new product introductions. Douglas Harned (Bernstein) asked about Howmet’s responsiveness to rapid IGT demand increases. Plant explained that while yield improvements have accelerated recent growth, major new capacity additions will be staged over several years due to equipment lead times. Robert Stallard (Vertical Research) questioned whether Howmet has sufficient aerospace OEM capacity for rising wide-body rates. Plant stated that current and planned expansions will accommodate both narrow- and wide-body build increases. Scott Deuschle (Deutsche Bank) sought clarity on the adoption of multi-chemistry coatings and the scale of that growth opportunity. Plant confirmed that new coating technology is being deployed and investments are ongoing to expand these capabilities. Seth Seifman (JPMorgan) asked about capacity utilization and sequential sales ramp in Engine Products. Plant indicated that some new machines are still being brought to full rate and additional equipment is planned to support anticipated growth. Looking forward, the StockStory team will be watching (1) the pace at which Howmet executes its planned capacity expansions in aerospace and gas turbines, (2) progress on realizing cost synergies and operational improvements from recent acquisitions, and (3) sustained growth in high-margin spares and advanced coating products. The trajectory of global aircraft build rates and industrial energy demand will also be critical for ongoing momentum. Howmet currently trades at $282.95, down from $291.42 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

ATI Inc. ATI posted adjusted earnings of $1.23 per share for the second quarter of 2026, up 66.2% from the year-ago quarter. The figure beat the Zacks Consensus Estimate of $1.03 by 19.4%. Sales of $1.26 billion rose 10.6% year over year and topped the consensus estimate of $1.22 billion by 3.4%. Strong aerospace and defense demand, favorable pricing and an improved product mix supported the quarter. Backlog reached a record $4.4 billion, up 18% year over year, highlighting sustained demand for the company's aerospace and defense materials. ATI Inc. price-consensus-eps-surprise-chart | ATI Inc. Quote High Performance Materials & Components generated sales of $637.1 million in the second quarter, up 4.6% from $608.8 million in the year-ago period. However, the figure fell short of the consensus estimate of $669 million. The improvement primarily reflected strong demand and pricing for commercial jet engine products. The segment EBITDA margin was 24.1% compared with 23.7% a year ago. Higher volumes and favorable pricing supported the year-over-year margin improvement, partly offset by increased manufacturing and period costs. Advanced Alloys & Solutions posted sales of $624 million, up 17.4% from $531.6 million in the prior-year quarter. The figure surpassed the consensus estimate of $550 million. Growth was primarily driven by aerospace and defense and conventional energy markets. The segment EBITDA margin expanded to 23.7% from 14.4%. Results included a $9.9 million gain from the sale of a previously closed manufacturing facility. Excluding that gain, stronger pricing and a favorable product mix supported the margin improvement. ATI ended the second quarter with cash and cash equivalents of $783 million. Cash provided by operating activities was $131.8 million during the quarter, while capital expenditures totaled $68.6 million. Adjusted free cash flow came in at $68.6 million. Long-term debt stood at $1.81 billion at the end of the quarter. ATI expects third-quarter 2026 adjusted EBITDA in the range of $305-$315 million. Adjusted earnings are projected between $1.31 and $1.37 per share. Management expects momentum to continue into the second half, supported by contracted pricing improvements, a richer product mix and increasing production volumes. For full-year 2026, ATI raised adjusted EBITDA guidance to $1.14-$1.2 billion from its previous outlook of $1.01-$1.06 billion. Adjusted earnings guidance was increased to $4.9-$5.18 per share from $4.2-$4.48 previously. The company also lifted its full-year adjusted free cash flow forecast to $550-$600 million from the earlier range of $465-$525 million. Management expects targeted investments and operational execution to increase available capacity as demand for aerospace and defense materials remains strong. ATI’s shares are up 211.3% over a year compared with the 14.4% growth recorded by the industry. Image Source: Zacks Investment Research ATI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Howmet Aerospace Inc. HWM reported second-quarter 2026 adjusted earnings of $1.33 per share, up 46% year over year. The figure beat the Zacks Consensus Estimate of $1.23. For 2026, Howmet Aerospace raised its revenue outlook to $10-$10.1 billion. Adjusted EBITDA is now anticipated between $3.21 billion and $3.25 billion. Axon Enterprise, Inc. AXON reported second-quarter 2026 adjusted earnings of $1.88 per share, down 13.8% year over year. The figure missed the Zacks Consensus Estimate of $1.89 by 0.5%. AXON raised its full-year revenue outlook to 32-34% annual growth, up from 30-32% expected earlier. The updated view reflects continued momentum across the company’s connected devices and software offerings. GE Aerospace GE reported second-quarter 2026 adjusted earnings of $2.02 per share, up 22% year over year. The figure beat the Zacks Consensus Estimate of $1.86 by 8.6%. GE now expects 2026 adjusted revenue growth in the high-teens range, up from its prior low-double-digit outlook. Adjusted earnings are expected in the range of $7.65-$7.85 per share, up from $7.1-$7.4 expected earlier. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ATI Inc. (ATI) : Free Stock Analysis Report GE Aerospace (GE) : Free Stock Analysis Report Axon Enterprise, Inc (AXON) : Free Stock Analysis Report Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 10 a.m. ET Vice President of Investor Relations - Paul Luther Executive Chairman and Chief Executive Officer - John Plant Executive Vice President and Chief Financial Officer - Patrick Winterlich Operator: Good day, and welcome to the Howmet Aerospace Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Paul Luther, Vice President of Investor Relations. Please go ahead. Paul Luther: Thank you, Chloe. Good morning, and welcome to the Howmet Aerospace Second Quarter 2026 Results Conference Call. I'm joined by John Plant, Executive Chairman and Chief Executive Officer; and Patrick Winterlich, Executive Vice President and Chief Financial Officer. After comments by John and Patrick, we will have a question-and-answer session. I would like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations. You can find the factors that could cause actual results to differ materially from these projections listed in today's presentation and earnings press release, and in our most recent SEC filings. In today's presentation, references to EBITDA, operating income and EPS mean adjusted EBITDA, adjusted operating income and adjusted EPS. These measures are among the non-GAAP financial measures that we've included in our discussion. Reconciliations to the most directly comparable GAAP measures can be found in today's press release and in the appendix in today's presentation. In addition, unless otherwise stated, all comparisons are on a year-over-year basis. With that, I'd like to turn the call over to John. John Plant: Thank you, PT, and good morning, everyone, and welcome to the Howmet Q2 earnings call. Let's start with the highlights on Slide 4. Howmet completed a successful second quarter. Headline revenues were up 24% year-over-year with strong incremental margins of 46%, and that was after some impact from the CAM acquisition. Excluding all the M&A activity this year, organic growth was very healthy at 21% for the quarter and 20% for the first half. EBITDA margin in Q2 was 32.1%, an increase of 340 basis points year-over-year, including the absorption of CAM starting in April. 2027 is a focus year for our CAM optimization plan to begin to drive noticeable synergies. Operating margin was 28.8%. Second quarter free cash flow was just under $0.5 billion and free cash flow totaled approximately $840 million for the first half. Earnings per share were $1.33, an increase of 46% year-over-year. A total of $600 million in shares were repurchased in the first half of the year with $300 million being made in the second quarter. We continue to repurchase shares in July for a further $200 million, which resulted in repurchases in 2026 already greater than in 2025. In addition, a further $186 million of debt was retired. I'll now pass the call to Patrick, who will set out the end market growth percentages and provide some segment commentary. Patrick Winterlich: Thank you, John. Good morning, everyone. Please move to Slide 5. It was another strong quarter for Howmet with all end markets growing. We are well positioned for the future and continue to invest for growth. Total revenue was up 24% in the first quarter (sic) [ second quarter ]. Excluding the net impact of the 3 transactions we completed this year, revenue was up 21% year-over-year, an acceleration from the 19% organic growth rate in the first quarter. Commercial aerospace growth was strong at 28% with organic growth of 26%, driven by demand for both new builds and spares. We continue to see higher spares demand on both legacy and next-generation engines. Defense aerospace growth continued to be solid at 11%, with organic growth of 7%, reflecting healthy spares activity as well as higher legacy fighter demand. Commercial transportation revenue was up 12%, driven by the pass-through of higher aluminum costs. On a volume basis, wheels was down 8%. However, on a sequential basis, wheels volumes were up 7% as the North American market began to recover. Gas turbine growth remained very strong with revenue up 38%. Gas turbine growth is driven by the increased demand for electricity generation, especially from natural gas for data centers. Growth in other market of 39% was largely driven by the Brunner fastener acquisition completed in February. Within Howmet's markets, spares growth remained robust. Total spares revenue across the commercial aerospace, defense aerospace and gas turbine markets was up 37% to approximately $560 million (sic) [ $460 million ]. Spares represents a greater portion of our total revenue than historically, now at approximately 22% through the first half of 2026. In summary, continued strong performance in commercial aerospace, defense aerospace and gas turbines with the commercial transportation market recovery is underway. Moving to Slide 6, starting with the P&L. Second quarter revenue, EBITDA, EBITDA margin and earnings per share all exceeded the high end of guidance. On a year-over-year basis, revenue was up 24% and 21% organically, the strongest quarterly growth rate for the company since the first quarter of 2023. EBITDA continued to outpace revenue growth, up 39%, the strongest growth in EBITDA since the third quarter of 2021. EBITDA margin increased 340 basis points to 32.1% despite a modest headwind from the CAM acquisition. Incremental flow-through of revenue to EBITDA was healthy at 46% year-over-year. Earnings per share were $1.33, up 46% year-over-year. Now let's cover the balance sheet and cash flow. The balance sheet remains strong with a quarter end cash balance of $564 million. Free cash flow in the quarter was excellent at $479 million. Net debt to trailing EBITDA finished the quarter at 1.4x following the completion of the CAM acquisition. During the quarter, we paid down our $186 million Japanese Yen term loan due November 2026. In addition, during the quarter, we entered into a cross-currency swap to synthetically convert our $300 million note due 2028 into a Japanese Yen liability. The combined effect of these 2 actions saves approximately $12 million in annualized interest expense. Liquidity remains strong with an undrawn $1 billion revolver complemented by a $1 billion commercial paper program, $450 million of which was drawn to support the CAM acquisition. Turning to capital deployment. CapEx was $104 million in the quarter. The majority of our capital spend continues to be in the Engine Products segment as we continue to invest for growth in both the aerospace and gas turbines markets. Investments are backed by customer contracts. In the quarter, we repurchased $300 million of common stock at an average price of $251 per share. We repurchased an additional $200 million in July at an average price of $277 per share. This brings year-to-date repurchases to $800 million at an average price of $248 per share. As of today, the remaining authorization from the Board of Directors for share repurchases is approximately $700 million. We continue to be confident in strong future free cash flow. We announced an increase in the Q3 quarterly stock dividend of 17% from $0.12 per share to $0.14 per share, payable this August. Finally, turning to M&A. We completed the previously announced CAM fastener acquisition on April 6 for approximately $1.8 billion, and the integration is on track. Now let's move to Slide 7 to cover the segment results for the second quarter. The Engine Products team delivered another excellent quarter for revenue growth, EBITDA and EBITDA margin. Revenue increased 32% to $1.37 billion. Commercial aerospace was up 37% and Defense aerospace was up 17%. The gas turbines market was up 38%. Demand continues to be strong for both original equipment and spares. EBITDA outpaced revenue growth with an increase of 51% to $517 million. EBITDA margin increased 470 basis points to 37.7%, while absorbing approximately 485 net new employees in the quarter, positioning us well for future growth. Please move to Slide 8. Fastening Systems had another solid quarter. Revenue increased 37% to $589 million, including the impact of the CAM and Brunner acquisitions. Commercial aerospace was up 39% and Defense aerospace was up 45% Commercial transport was flat year-over-year. Excluding the impact from acquisitions, total fasteners growth was double digits. EBITDA outpaced revenue growth with an increase of 40% to $177 million. EBITDA margin increased 90 basis points to 30.1%, reflecting continued operational execution. As expected, margins declined sequentially, driven by the addition of the CAM business in the second quarter. Moving to Slide 9. The Engineered Structures team continues to drive improvement in the business. Revenue declined 13% to $269 million due to the divestiture of the Savannah disk forging facility on March 31. Excluding the impact of Savannah, revenue growth was approximately flat. We continue to focus on higher margin and stronger return opportunities in the business. EBITDA margin increased 170 basis points to 23.8% as we continue to optimize the Structures segment to maximize profitability. Finally, please turn to Slide 10. Forged Wheels delivered another healthy quarter. Revenue was up 14% as an 8% decrease in volume was more than offset by higher aluminum pass-through. Volumes rose 7% from the first quarter as the North American market began to recover. EBITDA was $88 million, an increase of 16% despite lower volume. EBITDA margin increased 30 basis points year-over-year, but declined 270 basis points sequentially, reflecting the dilutive effect of sharply higher aluminum cost pass-through. Higher metal pass-through diluted margins by approximately 360 basis points year-over-year, but had no material impact on EBITDA dollars. This dilutive impact on margin percentage is likely to continue at least for the next couple of quarters. EBITDA dollars were largely unchanged sequentially. We continue to outgrow the market, driven by our premium products. Now let me turn the call back to John. John Plant: Thank you, Patrick, and please move to Slide 11. Let me turn to the outlook. First, as you can see, the first half target outcomes have been achieved while also facing a turbulent economic and political backdrop. The tailwinds experienced have reflected more robust build rates for commercial aircraft and also for the positive order intake for commercial truck builds. In addition, IGT demand has been extraordinary. Moving specifically to commercial aerospace. The ongoing conflict in the Middle East has resulted in increased volatility of jet fuel and gasoline prices, and has impacted recent commercial air traffic activity. Howmet has not experienced any changes in customer demand. Throughout the conflict to date, air freight volumes have continued to strengthen. At the same time, interest rates have climbed, reflecting higher inflationary signals and the outlook for near-term rate cuts has dimmed. Despite the issues in the Middle East, orders for new aircraft have continued to grow and the overall backlog has increased. This bodes well for future aircraft build rates with increases being seen for the balance of 2026 into 2027 and beyond. The business jet segment also continues to be strong with increases both in new aircraft build and spares. Defense sales also continue to be strong, especially for spares and legacy aircraft with the F-35 OE build continuing to be solid. The near-term outlook for our missile business continues to strengthen, with demand increases being either seen or signaled for the PAC-3, THAAD, Tomahawk and some classified programs. The focus on engines for large missiles, drones and collaborative combat aircraft continues with growth expected in the medium term. Turning to gas turbines. We have completed negotiations with the last of our 7 major customers, though the overall picture continues to expand with some customers already wanting to revisit and add to their demand outlooks. This gas turbine demand growth, both for large, small and medium-sized turbines is further supported by new gas turbine blade applications and also increased new product technology introductions, and these will help Howmet to outgrow its current market share. Our capital expenditure requirements continue to increase. And while this year, we are now likely to exceed $500 million in capital spend, we are already seeing the need to further increase this in 2027. This increased level of capital expenditure provides support to our future organic growth expectations. The outlook for free cash flow conversion and net income is maintained at our 90% target conversion throughout the period. The resultant cash flows to date have enabled us to deploy capital for organic growth, execute share buybacks and support dividend growth while also absorbing a significant acquisition. Continued healthy cash generation should allow us to return our leverage level back to approximately 1x net debt-to-EBITDA by year-end, the same level that we exited 2025. Given the level and the high level of our capital expenditure, plus our acquisitions of almost $2 billion and the share buybacks of an amount already exceeding 2025, our leverage level is very comfortable and allows us to consider all paths of optionality going forward. Moving now to the commercial truck wheels business. The results are strong even after coping with extraordinary increases in the aluminum LME and Midwest premiums. Growth into the second quarter accelerated and the outlook for the balance of the year looks healthy with external forecasters now envisaging an even stronger 2027. Moving to specific numbers for the guide and reflecting the typical third quarter seasonality, including European vacations, our numbers are: revenue in the third quarter of $2.75 billion (sic) [ $2.575 ] billion, plus or minus $10 million; EBITDA of $830 million, plus or minus $5 million; earnings per share of $1.35, plus or minus $0.01. For the full year guide, this has increased again to revenue of $10.05 billion, plus or minus $50 million, EBITDA of $3.23 billion, plus or minus $20 million, earnings per share of $5.27, plus or minus $0.04. Free cash flow is seen to be $1.9 billion, plus or minus $50 million. These guide increases are across the board given our growing confidence in the year. In closing, the Howmet team delivered a solid first half performance with prospects for further growth and a robust second half as outlined. In November, at our Q3 earnings call, we expect to provide our first sighting of the 2027 revenue, which we expect will be an increase over 2026. And with that, we'll now move to the Q&A session. Operator: [Operator Instructions] The first question today comes from Sheila Kahyaoglu with Jefferies. Sheila Kahyaoglu: John, you noted IGT customers continue to revise upwards their demand outlook, and I don't blame them, who wouldn't want more. You're talking about higher CapEx for the foreseeable future. What are you seeing in the competitive dynamics at play in the IGT market in terms of the technology advantage you have, the scale which you could produce? And how are you thinking about your own ability to support these ramps as a few of your peers also seek new business there? John Plant: Thanks, Sheila. Let's deal with scale first. And I think I'll start off with saying it's important to note that Howmet has a market share in excess of 50% globally for turbine blades in the IGT market. And therefore, the growth of that market is dependent upon our willingness to invest, which we're doing. And we've already commented in previous calls about the new plant we built in Japan, the major expansion in Europe, you can always call it a new plant and also building out the capital in our existing footprint in Virginia in the U.S. In addition to facilitization that with very substantial investments in new capital equipment, we have created additional space in our Virginia plant by exiting some or moving some nickel alloy work such that we can either make additional IGT componentry or if not some additional titanium castings. And I guess we'll deploy that space on a first come first serve basis and see expansion. Bonding for sure, it's going to be sold out very quickly. We're also seeing, as I commented in my earlier remarks that we have several new applications for existing technology. And also, we have several new product introductions that we have to make over the next 2 or 3 years. And that leads us to believe that our market share will further increase. To date, the market is roughly split equally for turbine blades between Equiax and directionally solidified parts with single crystal still being a fairly minor part of the overall turbine blade topology at sort of less than 5%. So when you think about our technologies, first of all, for the movement through the normal sequence through turbine blade applications, we see the opportunity of further moving from Equiax to directionally solidified and then to single crystal, albeit at the moment, the demand is such that customers really just want whatever we can make. And so for the next couple of years, I expect the demand increase to be roughly split between Equiax and directionally solidified. In terms of where does this go in the future? Clearly, we're going to move to an increased use of cored blades to allow air flow through them. And again, that plays very much to the Howmet strength and our capabilities in very large core blade capabilities, and we'll see that increasingly be deployed as we go through towards 2030 and beyond. So I feel as though both for the applications -- new applications we're seeing, the technology movement and/or drift that will go on and the capacitization that we have, a fairly good situation for us, plus the elevated CapEx. So we have CapEx being significantly deployed in 2026. And in my comments about the future direction is that we will see another significant step up in 2027, which will be both for the industrial gas turbine market, but also for commercial aerospace. And I certainly don't want to forget commercial aerospace because as recently as last week, I signed off, in fact, the building of a new plant in that area as well. So my expectation is we will continue to meet market demand. We'll grow with the market, and I think we'll also grow with those new product introductions beyond the market and increase our overall share. I'll just digress for a moment because I do want to cover something which has been topical of late, and that is, is there a threat for data centers in space. And so I'll just speak very briefly to that because it is something which has been raised. Clearly, conceptually, the opportunity of getting more direct access and using solar arrays is possible. And it's a big solution to solve what may be a permitting problem at the moment. But there's a lot of technical things which have to be overcome, I mean, starting with, if you're going to put a gigawatt of capacity into space, then maybe you've got to lift 20,000 tonnes and what sort of rockets and frequency of launches do you need to get that? And so I imagine to do one data center using -- the current rocket technology is going to be 1,000 launches or maybe it's 150 or 200 starship launches. And that's obviously a lot more than we have today. And I mean, the benefit is you don't need to get permits, but the issues of maintenance of replacement of GPUs every couple of years and also the sheer scale of the solar arrays and the issue of space debris and how do you fix them once it's been hit with debris over, let's say, 4 square kilometers of unit. Those are big things to overcome. So I think we're looking at really sometime in the 2040s or maybe in 2050s to consider this as a likely outcome. So I just felt I'll try to give that perspective while talking about the overall current market as well. Operator: The next question comes from Doug Harned with Bernstein. Douglas Harned: Just, John, continuing on the IGT path here, as you've talked about, the demand is extraordinary. And you've talked about a number, 6 or 7 new agreements that you've signed. And what -- I'm trying to understand here is how quickly can one respond to demand in terms of sort of signing a deal and then actually delivering products on that. And I say it because your reference to SpaceX, I mean, this week, they talked about adding at least 15 gigawatts of terrestrial capacity over the next 18 months. I mean is it possible to respond to this kind of growth since you're the leading player on blades? John Plant: So I'll start with 2026, Doug. And our, let's say, 30% -- 35%, 38% increase in revenue has actually exceeded what I thought we would possibly do. And that's been mainly from achieving yield improvements on the existing asset base, albeit if you go back and look at the comments I made towards the back end of '24, where we're talking about making some investments in IGT, which was, let's say, notable because we've not really talked about it before. And then what we've talked about in 2025, especially given the consequences of the new administration and their fossil fuel focus. Then, we do have the benefit of some of that capacity coming on stream. So we witnessed the delivery of our first new large casting machine into Japan and another one is going to follow in the second half. And in fact, that new plant that I -- in fact, I visited that in April is going to be -- it's already essentially fully spoken for. We have one casting pit left, but I think that capacity is going to be gone. So we have a progressive build-out of what we've already committed by way of significant investments. But for the new, I will say, gigawatts of capacity coming on, then really we're looking at 2028, 2029 and even the more recent ones, '29 into 2030. So what I expect is that we will see growth throughout the next 4 or 5 years. And we've installed some of that already. Some of it's already logged to come in, in '27, but with another major step into '28 and '29. I suspect that we may not have finished yet because as I said earlier, we are seeing some of the demand patterns revisited. And so I think there's more at play to come, which we haven't built into our future plans yet because until it's more certain, then we'll just hold off on that and be clear. So it's not a single item, which equals capacity in next. But if we started now, you can assume that it's a brand-new commitment, let's say, August of '26. You can say it's earliest August of '28, if you just like say, okay, what's the next piece of machine equipment that we could build or we can get from our machine tool suppliers. And we've had to book capacity at some of those on the expectation of some of this coming through just to make sure we can be responsive to our customers. Operator: The next question comes from Robert Stallard with Vertical Research. Robert Stallard: John, I was wondering if you could give us an update on what you're seeing on aerospace OEM and the wide-body market, how those rates are progressing and whether you think Howmet has enough capacity in place for the targeted rates or even beyond that? John Plant: Okay. So first of all, by way of capacity, essentially, the majority of our manufacturing equipment -- that equipment does not know whether it's building parts for a narrow-body aircraft or a wide-body aircraft. So it will have, I'll say, similar casting machines, similar transfer presses and going through similar, I'll say, continuously moving heat treatment furnaces or kilns. And so for us, it's more a question of the overall market rather than wide-body per se. We do feel as though wide-body will increase over the next, I'll say, a couple of years. And there are demand increases signaled at both Boeing for the 787 up to Rate 10 until the South Carolina plant is further expanded and then maybe opportunities to go significantly higher after that expansion. And then also Airbus, which has probably struggled on the A350 over the last 2 or 3 years, and now seem to be entering a period where there's some confidence that their, let's say, Rate 5 or 6 will move to 8 or 9 over the next year. And we're getting increasingly confident that with the freighter plus additional A350 demand that, that will also move up significantly in the future. So we do expect on a percentage basis, large increases in the wide-body market and build rates over the next, say, 2 or 3 years. But also, we're going to see, I think, increases in the narrow-body market also for the 737 for the A320. And so we are poised with additional capacities we've already prepared. And I think I just referenced a new plant that we committed to last week, at a major expansion and building out of one of the sites we have to create the opportunity for that further expansion that's going to be required. Operator: The next question comes from Scott Deuschle with Deutsche Bank. Scott Deuschle: John, is today's commercial aerospace growth in Engine Products seeing any benefit from shipping these newer, higher-value multi-chemistry coatings? Or is that transition to multi-chemistry coatings still largely in front of you? And then I was wondering if you could help contextualize the scope of the growth opportunity that, that provides. John Plant: Okay. So we have, first of all, again, been increasing our coating capacity over the last 2 or 3 years and indeed coat both our own turbine blades and also those of others in the industry. So that expansion has continued with, let's say, what are called new coating guns and pits. And in fact, we have just completed the last available space in our Whitehall facility, pending the decision about whether we again expand the footprint of that. And that is facilitized for multi-chemistry and also the opportunity to put all of the coatings on at the same time. So today, we already put on more than one type of coating, but if you're talking about some of the exotic coating capability, we actually do not do separate batch runs through that capacity. We're able to deposit all of the different chemistries all at the same time and do it on both the external surfaces and also the internal surfaces of the turbine blades. So there are some very small orifices that need to be -- have this chemical deposition at nanoparticle level of, I'll say, technology deposition on a very consistent basis because you cannot afford to block any of the airflow passages. And so a short answer is, yes, we're capacitizing, facilitizing. We're just building out the ability to do multiple depositions all in one. And we're actually facing the decision now, do we actually expand the plant. And it's probably more likely than not given, I'm already very predisposed to actually buying the advanced equipment for that, which -- in extremis because we tend to get ahead of these things. It's a 3-year lead time for some of that very exotic equipment. Operator: The next question comes from Seth Seifman with JPMorgan. Seth Seifman: I wanted to ask about the ramp on commercial aero sales in the engine business. It was a pretty, I think, about 10% sequential growth in the quarter, assuming that's driven in large part by new capacity that you've added. In terms of that new capacity that started coming online at the end of last year, how far -- I guess, how far are you towards the utilization of that new capacity? And how do we think about that continued kind of sequential trajectory from here? John Plant: Yes. So first of all, we still have some of the machines that we have installed coming up to full rate. And we've also been building out the employee base that is necessary to go along with that build-out across all the shifts. And from the existing major capacity expansions, we signaled there's still some equipment still to flow in during the second half of 2026. But it's not like one and done, Seth. It's going to be additional equipment that we have to install from what we've already committed to and contracted either with external machine tool manufacturers or if not our own, for example, building of our own casting machines that we do. And we have a very active program of doing that over the next, I'll say, 2 or 3 years, both for commercial aerospace and the IGT market. And when we're looking at it right now, we do need to make further investments beyond what we have today to be able to achieve the stated rates that our customers will want as we go forward. So I mean the only question we have is what's the total size of the narrow-body market, total size of the wide-body market and then the -- add them together because for us, it's less a question of is it this aircraft platform or that aircraft platform, but it's the aggregate of all of them put together, plus in addition to that, the spares demand. And as you've seen, spares growth has also been very substantial. And we expect that to continue to be positive because we've still got the transition for the LEAP-1B and then some, I'll say, retrofit on that plus, say, while we've started the GTFA for Pratt & Whitney, there's a very large increase to be achieved in the second half of this year and even larger into and through 2027. Operator: The next question comes from Ken Herbert with RBC Capital Markets. Kenneth Herbert: I wanted to just follow up on the aerospace capacity theme for a minute. Boeing and Airbus are talking about getting to production rates that are 25% to 30% higher than where they peaked pre-pandemic. You've got a lot of moving pieces on the engine side in particular. But where do you think you and the industry are in terms of supporting those rates 3 to 4 years from now? And ultimately, what's the interest to put capacity and to support those rates when you're going to be hitting those rates, right, when you're likely talking about new narrow-body clean sheet aircraft? John Plant: It's very difficult to predict the date of entry into service of a new narrow-body, and it's probably even more difficult to predict what form the engines are on those, let's say, aircraft platform selections, particularly because some of the options are mutually exclusive in terms of wing design. And therefore, it's going to depend upon more fundamental questions of sourcing strategy, whether you go single source or dual source and your preparedness to do so and what risks are involved. So that's one big topic to be considered around a date uncertain picture. I think more pertinent is probably what is the true demand pattern over the next, let's say, 3- to 5-year horizon and its sustainability because, again, we don't want to certainly invest for a singular year peak and then face, I'll say, demand destruction thereafter. So we have to be continually monitoring the aircraft backlogs and surety around those in terms of what's the propensity for cancellation and how many are real orders versus options and therefore, what's the true demand pattern. And so when we look at things like narrow-body previous highs, which may have got to about 100 between Boeing and Airbus, the 737 and A320 in 2019, then if you look at today's and add those 2 aircraft platforms plus the A220 and what do they peak out at? And the question is, is that a combined 125 versus the 100 peak -- prior peak? Or is it 150? And what's the ability of the whole supply base to be able to support those levels of demand and then what's the sustainability thereof. So I think it's reasonable to say that we're clear, we're going to make more. The degree to which we have to make more is really yet to be determined. And I suppose it's, to some degree, also same as we view, let's say, rate increases where we think they're likely. But when we see numbers maybe spike for a moment, then we'll let inventory deal with that while we recruit the workforce to be able to operate and produce those parts inside our capacity envelope. So it's a very live topic, and you also have to look at not just what can Howmet produce, but also what's the ability of the whole industry to march in lockstep and what's the weakest link in that chain of overall build rate increase. And there's been a lot of commentary in recent years about those weak links and the supply base, as you know, has been held as responsible for much of the build rate issues. Again, whether that's justified or not, that's not a question for Howmet. Operator: The next question comes from Myles Walton with Wolfe Research. Myles Walton: I was wondering if you could touch on fastener operations below the surface of the acquisition. And in particular, are you, John, starting to see the pull on the wide-body yet? Or is this the commentary more positive at this point? John Plant: We are beginning to see the pull. So if you were to say, are we anticipating getting to, let's say, Rate 9 or even Rate 10 towards the back end of 2027 for the 787, then yes, we begin to see demand fill in for those increased rates above the, let's say, level of 6 or 7 last year and possibly now production of 8. So, yes, we are beginning to see that. Of course, it's still ways away from the prior peak in 2019 of 13 a month achieved on a few months and still well short of the anticipating numbers, which are well in excess of 13, which as I said earlier, requires the capacity expansion in South Carolina to be done to achieve that. So, yes, we're seeing it. It's just part of the overall demand increase in -- for our fasteners business. So we are seeing increased demand across not just, I'll say, today's commercial aerospace platforms, but also for defense platforms and also for, I would say, some of the larger drones and also working with some of the, I'll say, the newer -- let's call it the new tech defense companies as well where we're seeing our first orders from those as well. So we have a very broad-based increase in demand. And our issue right now is being able to -- to be able to cope with all of that, those increases. But again, we are putting investment into fasteners business, the legacy fasteners business. And also, we are providing additional capital to the new CAM acquisition as well. Myles Walton: Can you update us where you are in the cutovers of the LEAP-1A/1B and GTF Advantage? John Plant: Well, the 1A/1B cutover to the new technology blade has not yet occurred. Now we have pulled a lot of it, not all of it, and we'll see increased builds during the second half of 2026. So I expect we'll do the same as we did on the LEAP-1A and have a few hundred engine sets ready in either our or our customers' inventory such that the cutover, which I think will probably more likely be the first half of -- first quarter of 2027. But again, date not fixed, we'll be in a good supply situation for that cutover. And then there will be demand not just for the OE build, but also, I'll say, to refit some of the existing fleet with that more robust solution. On GTFA, similarly, we are building and each month, we are lifting our output, albeit it's nowhere near the rate that needs to be achieved currently. And that applies to both the turbine blades and vanes for that aircraft engine. And what I see is that the back half of this year, I think that we'll probably be supplying the full volume of the legacy blade with still a very large aftermarket demand because that's the only one that's truly available as a complete suite of upgrade for the engine. And so it's going to be the legacy blade at pretty full volumes for the balance of this year, us building out increased production each quarter for the GTFA ready for some time in 2027 to be fitted to aircraft engine, which arrives at customers, plus also then the retrofit program, which I think is going to be an even bigger program for us than the -- on the 1B. Operator: The next question comes from Scott Mikus with Melius Research. Scott Mikus: Turning to the defense side, the F-35 fleet has seen heavy utilization in Iran (sic) [ Israel ]. Just curious about how you're thinking about the uplift to defense spares in the second half of this year and in 2027 as well beyond what you're initially expecting? And is that also driving the need for incremental CapEx at Engine Products? John Plant: I guess the -- that question, Scott, needs to be widened out a little bit beyond just F-35 because of the other aircraft being flown and also use of missiles as well. And so the very precise answer to are we seeing a demand increase currently from all the additional missions flown and missile stocks utilized, the answer to that is no. We are not. But in discussions with our engine customer, as recently as the air show last month, both of us are expecting to see a significant increase in spares demand coming from that. And I think we'll see it on aircraft from F-18s, F-22s, F-35s, et cetera, plus the parts we supply to some of the stealth bombers, et cetera, et cetera. So I think there's going to be -- I know it's -- there's an anticipation of some bubble of demand coming. But I don't necessarily think it's, like, it's not going to be in Q3 of 2026. I don't know about Q4 yet. But it's more likely a 2027 items that is anticipated but not assured because we don't have specific orders in hand or I'd say, anticipated requirements in hand. On the missile side, which I would say is currently very active given the use of missiles. And so we are being asked to consider various rate increase proposals across, again, I'll say, 2 or 3 customers with the sort of missile programs that I mentioned in my earlier remarks. And to some degree, we've got to work our way through that in terms of the durability of that demand. And also, it's actually competing for the space in our Virginia facility and at the moment, we have nothing formally agreed by way of increased orders, which are going to be absolutely necessary should those missile programs actually get built out. Operator: The next question comes from Peter Arment with Baird. Peter Arment: Nice results. John, if I look at Fastening margins and if we backed out the CAM contribution or at least our estimate, it looks like you had, again, another kind of almost record margin for Fastening. What's the best way to think about the time line for synergies for the CAM acquisition? John Plant: Okay. So the -- I think the first 3 months of the acquisition have been very much getting hold of, for example, the IT systems and correcting and improving them to have the latest levels of, let's say, CMMC capabilities for cybersecurity and a more modern approach in that area, whole IT suite. So a lot of work has gone on there. The usual simulation and harmonization of benefit programs for the employees and also an assessment of what needs to be done to improve the asset base. All of the original thesis about what we think we can do by way of improving the margins is there, both for, I'll say, the more straightforward, I'll say, operating synergies of amalgamating and looking at the supply base. We've got clear line of sight to that now, and we'll begin to see some of that in the second half of the year. But I think the majority of it comes in 2027. It will take us a little while to burn down some prior commitments, both in the supply base and also in the customer arena. And also all the work we said that we would do by way of building out some additional distribution programs for our own distribution arm rather than going through third-party distributors that will progressively come on board during 2027. So we're doing it. It is -- everything we thought that CAM would be for us is still intact, and it looks good for us. But this quarter and for the margin [indiscernible] of this year, we're going to see they were a 20% company, so we were at 30%, you blend them together and basically, any increase we've done on our legacy business has offset that dilution. So we're still doing it like a 30% fasteners margin. But with the prospects, hopefully, of seeing some improvements on that as we get into 2027. In earnings per share terms, the debt servicing that will offset a lot of the earnings. So you said you'd be pretty breakeven-ish for this year and again, starting to see positive EPS effect in 2027 and beyond. Operator: The next question comes from John Godyn with Citigroup. John Godyn: John, I just wanted to follow up on free cash flow deployment and opportunities. Obviously, you guys are executing a balanced approach. We saw the dividend go up. The buyback is going up. But just given the top-tier operational execution of the company, there seems to be an argument to continue leaning into M&A. And I wanted to take your temperature there and maybe just plug into your kind of vision and world view. John Plant: So as you've seen, we did lean into a couple of acquisitions this year. And I think the really good outcome is that we've expanded the top line and bottom line of the company. And even with all of that, I'll say, use of cash flow to buy back stock and now increase the dividend, we see ourselves returning very close to the same leverage level that we had at the end of last year. So in one sense, that's really good and gives us that optionality going forward. So what do I expect now looking into '27 and 2028? Well, I mean, I doubt we'll do much by way of change on the dividend in the next 12 months, given we've just increased it by a further 17% on top of the increase last year and the year before. So that's -- I think that's like settled for a period of time. And then going into '27, certainly, my expectation is that we'll probably buy back more stock than we have in 2026. But at the same time, I think we have a willingness to examine further M&A opportunities and feel quite predisposed to doing it, albeit it would follow our MO of trying to buy what we think is a fundamentally quality company and to see whether the combination with Howmet and that company can produce, let's say, some form of synergized benefits one way or the other. And so taking my temperature is, yes, we absolutely will need to consider further steps. But again, currently in that more bolt-on, we did, let's call it, a couple of billion dollars between the CAM-Brun, that sort of area, I'm not envisaging at this point anything mega large. We could have an epiphany, which I guess we'd signal, but at the moment, we don't see that. And I think it's far better we just continue with our path of trying to build out a company with a high growth rate, a high margin, good cash flow, and rinse and repeat. Operator: This concludes our question-and-answer session as well as our conference. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Howmet Aerospace, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Howmet Aerospace wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Howmet Aerospace. The Motley Fool has a disclosure policy. Howmet Aerospace (HWM) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Howmet Aerospace Inc. HWM reported better-than-expected second-quarter 2026 results on Aug. 6. Earnings per share surpassed the Zacks Consensus Estimate by 8.1% and surged 46% year over year.Total revenues of $2.55 billion surpassed the consensus estimate of $2.41 billion and increased 24% year over year. The second-quarter results benefited from persistent strength in its commercial and defense aerospace markets.HWM has been reporting strong earnings results courtesy of solid financial and operational performance from its segments. Backed by robust results and improving fundamentals, the company lifted its financial outlook. For 2026, Howmet Aerospace raised its revenue outlook to $10.00-$10.10 billion from $9.575-$9.725 billion. Adjusted EBITDA is now anticipated between $3.21 billion and $3.25 billion, higher than $3.025-$3.095 billion expected earlier. It also raised its adjusted earnings to $5.23-$5.31 per share from $4.88-$5.00. The strongest driver of Howmet Aerospace’s business at the moment is the commercial aerospace market. The strength in air travel continues, with both narrow and wide-body aircraft demand picking up, 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.In the second quarter of 2026, revenues from the commercial aerospace market surged 28% year over year, constituting 53% of the company’s business. Also, in the first quarter, revenues from the market increased 20% year over year. The sustained strength was attributed to increasing demand for engine spares and a record backlog for new, more fuel-efficient aircraft with reduced carbon emissions. Also, healthy build rates at Airbus for A320 and A350 aircraft, along with a production recovery in the Boeing 737 MAX aircraft, hold promise for HWM’s spare engine demand.Expanding the defense budget remains another growth catalyst for Howmet Aerospace. The defense aerospace industry has also been witnessing positive momentum, cushioned by steady government support. HWM has been witnessing robust orders for engine spares for the F-35 program and spares for other legacy fighters. In the second quarter, revenues from the defense aerospace market increased 11% year over year, constituting 15% of the company’s revenues.It's worth noting that the fiscal year 2026 Defense Appropriations Act was signed into law in February 2026, providing a strong budgetary allocation for defense. Such robust provisions set the stage for GE Aerospace, which remains focused on its defense business.HWM also remains open to strengthening its business through acquisitions. In April 2026, it completed the acquisition of Stanley Black’s business unit, Consolidated Aerospace Manufacturing LLC (“CAM”), for $1.8 billion. CAM’s well-known brands, engineering expertise and strong customer relationships have strengthened its aerospace fastening solutions portfolio.The company also remains committed to increasing shareholder value through dividend payouts and share repurchases. For instance, in the first six months of the year, it paid dividends worth $97 million. In July 2026, the company hiked its dividend by 17% to 14 cents per share (annually: 56 cents). Also, year to date through July, it repurchased shares worth $800 million. Shares of the company have gained 57.3% in the past year compared with the industry’s and the S&P 500 composite’s growth of 4.7% and 22.8%, respectively. It has also outperformed other industry players like RTX Corporation RTX and Textron Inc. TXT, which have returned 44.7% and 12.9%, respectively, over the said time frame. Image Source: Zacks Investment Research Earnings estimates for HWM have moved north over the past 60 days, reflecting analysts’ optimism.The Zacks Consensus Estimate for 2026 earnings increased 5.5% to $5.18 per share, suggesting year-over-year growth of 37.4%. The consensus mark for 2027 earnings moved up 3.4% to $6.05 per share, indicating a year-over-year increase of 16.8%. As earnings estimates increase, the stock is likely to follow suit. Image Source: Zacks Investment Research The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 50.98X, higher than the industry average of 34.49X. Also, it is overvalued compared with its peers, RTX Corp. and Textron. Notably, RTX Corp. and Textron are trading at 29.69X and 12.74X, respectively. Image Source: Zacks Investment Research Solid momentum across the commercial and defense aerospace markets, supported by impressive build rates, spare demand for engines and a robust defense budget, positions Howmet Aerospace favorably for strong growth in the quarters ahead. Built on a sound liquidity position, HWM’s shareholder-friendly policies also add to its appeal. Despite its expensive valuation, positive analyst sentiment and robust growth prospects indicate it is the right time for potential investors to bet on this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report Textron Inc. (TXT) : Free Stock Analysis Report RTX Corporation (RTX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

In the past week, Howmet Aerospace Inc. reported second‑quarter 2026 results with sales of US$2,547 million and net income of US$534 million, raised its full‑year 2026 revenue guidance baseline to US$10.05 billion, completed a US$2.80 billion share repurchase program, and declared a US$0.14 per‑share dividend payable on August 25, 2026. Together, the stronger earnings, higher full‑year outlook, and sizable buybacks highlight Howmet’s focus on scaling capacity while returning capital to shareholders. We’ll now examine how the upgraded 2026 revenue guidance reshapes Howmet Aerospace’s investment narrative and its outlook on capacity expansion. AI is about to change healthcare. These 43 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. To own Howmet Aerospace, you really need to believe in sustained demand for its advanced aerospace and industrial turbine components and in management’s ability to turn heavy capital spending into durable earnings. The latest revenue beat and upgraded 2026 sales guidance support the near term catalyst of capacity expansion paying off, but they do not remove the key risk that higher capex and headcount could pressure margins if build rates or aftermarket demand soften. The most relevant announcement here is the lift in full year 2026 revenue guidance baseline to US$10.05 billion, alongside Q3 guidance of US$2,565 million to US$2,585 million. This sharper top line outlook sits directly against the risk that capital expenditure and hiring step up faster than demand, forcing investors to weigh stronger recent execution against the possibility of production bottlenecks, overcapacity, or OEM program changes affecting future profitability. Yet behind the strong headline numbers, investors still need to watch how rising capex and labor costs could affect cash flows and margins if demand expectations change... Read the full narrative on Howmet Aerospace (it's free!) Howmet Aerospace's narrative projects $13.2 billion revenue and $3.1 billion earnings by 2029. This requires 13.0% yearly revenue growth and about a $1.2 billion earnings increase from $1.9 billion today. Uncover how Howmet Aerospace's forecasts yield a $325.93 fair value, a 16% upside to its current price. Some of the lowest estimating analysts were already cautious, assuming revenue of about US$12.1 billion and earnings of roughly US$2.7 billion by 2029, so this beat and raise could push them to reassess whether cash flow strain from higher capex and headcount is more or less likely than they first thought, and it is worth you comparing their more pessimistic view with the stronger story implied by the latest guidance. Explore 4 other fair value estimates on Howmet Aerospace - why the stock might be worth 30% less than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Howmet Aerospace research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision. Our free Howmet Aerospace research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Howmet Aerospace's overall financial health at a glance. Markets shift fast. These stocks won't stay hidden for long. Get the list while it matters: Capitalize on the AI infrastructure supercycle with our selection of the 56 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 16 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement. Uncover the next big thing with 20 elite penny stocks that balance risk and reward. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include HWM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Howmet Aerospace Inc.? Here are five stocks we like better. Howmet exceeded Q2 guidance, with revenue up 24% year over year, adjusted EBITDA up 39%, adjusted EPS up 46% to $1.33, and $479 million in free cash flow. Growth was led by commercial aerospace, defense and gas turbines. The company raised its full-year outlook to approximately $10.05 billion in revenue, $3.23 billion in EBITDA, $5.27 in EPS and $1.9 billion in free cash flow, while expecting continued demand growth through 2026 and beyond. Howmet is investing heavily to expand aerospace and gas-turbine capacity, with 2026 capital expenditures expected to exceed $500 million. It also repurchased $800 million of stock year to date, raised its quarterly dividend 17%, and expects the CAM Fastener acquisition to become earnings-accretive in 2027. Defense Dividends: 3 Strong Performers That Are Raising Payouts Howmet Aerospace (NYSE:HWM) reported second-quarter results that exceeded the high end of its guidance, driven by continued growth in commercial aerospace, gas turbines and defense markets. The company also raised its full-year outlook for revenue, EBITDA, earnings per share and free cash flow. Revenue rose 24% year over year in the second quarter, including the effects of acquisitions, while organic revenue increased 21%. Adjusted EBITDA increased 39% and EBITDA margin expanded 340 basis points to 32.1%. Adjusted earnings per share rose 46% to $1.33, while free cash flow totaled $479 million during the quarter and approximately $840 million during the first half. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Why Howmet Could Be the Sleeper Aerospace Name of 2025 “Second quarter revenue, EBITDA margin, and earnings per share all exceeded the high end of guidance,” Chief Financial Officer Patrick Winterlich said. The company generated 46% incremental flow-through from revenue to EBITDA, despite what management described as a modest headwind from the CAM Fastener acquisition. Commercial aerospace revenue increased 28%, or 26% organically, as demand grew for both original-equipment production and spare parts. Howmet said it continued to experience higher demand for spares on legacy and next-generation aircraft engines. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High 5 Aerospace & Defense Stocks Ready for Liftoff Defense aerospace revenue increased 11%, or 7% organically, supported by spare-parts activity and higher legacy fighter demand. Gas turbine revenue climbed 38%, with management attributing the increase to rising electricity-generation demand, particularly for natural-gas-powered data centers. Total spare-parts revenue across commercial aerospace, defense aerospace and gas turbines rose 37% to approximately $560 million. Spares represented about 22% of total revenue through the first half of 2026, a greater share than historically. → No Hangover: Revisiting Microsoft One Week After Earnings Commercial transportation revenue rose 12%, largely reflecting higher aluminum-cost pass-through. Wheel volumes declined 8% from a year earlier but increased 7% sequentially as the North American market began to recover. Executive Chairman and CEO John Plant said Howmet had not experienced any changes in customer demand amid Middle East conflict-related volatility in fuel prices and air traffic. He said aircraft orders and backlogs continued to grow, supporting expectations for higher build rates through 2026, 2027 and beyond. Engine Products revenue increased 32% to $1.37 billion. Commercial aerospace revenue in the segment rose 37%, defense aerospace increased 17%, and gas turbine revenue grew 38%. EBITDA increased 51% to $517 million, while EBITDA margin rose 470 basis points to 37.7%. The segment added approximately 485 net new employees during the quarter as it increased capacity for future growth. Fastening Systems revenue rose 37% to $589 million, including contributions from the CAM and Brunner acquisitions. Commercial aerospace revenue increased 39%, defense aerospace grew 45%, and commercial transportation revenue was flat. EBITDA rose 40% to $177 million, and margin increased 90 basis points to 30.1%. Howmet completed its acquisition of CAM Fastener on April 6 for approximately $1.8 billion. Winterlich said the integration was on track. Plant said the company spent the initial months addressing IT systems, cybersecurity capabilities, employee benefits and asset-base needs. Management expects some operating synergies to begin appearing during the second half, with the majority expected in 2027. Plant said CAM had been a roughly 20% margin business before being acquired, compared with about 30% for Howmet’s legacy fastening operations. He said the acquisition was expected to be approximately breakeven for earnings per share in 2026 due to debt servicing, before becoming accretive in 2027 and beyond. Engineered Structures revenue declined 13% to $269 million following the March 31 divestiture of the Savannah Disc forging facility. Excluding the divestiture, revenue was approximately flat. The segment’s EBITDA margin increased 170 basis points to 23.8%. Forged Wheels revenue increased 14%, as higher aluminum pass-through more than offset lower volumes. EBITDA rose 16% to $88 million. Management said higher metal pass-through reduced the segment’s margin percentage but did not have a material effect on EBITDA dollars. Plant said Howmet holds more than 50% global market share in industrial gas turbine blades and is expanding capacity in Japan, Europe and Virginia. The company has completed negotiations with its seven major gas turbine customers, though some have already sought to revisit and increase their demand outlooks. Management expects capital expenditures to exceed $500 million in 2026 and to rise further in 2027, supporting both industrial gas turbines and commercial aerospace. Plant said new commitments made in August 2026 would generally not produce capacity until approximately August 2028 because of equipment lead times. The company is also increasing aerospace capacity, including a newly approved plant investment. Plant said demand is beginning to build for higher wide-body production rates, including Boeing 787 production and Airbus A350 output. On engine technology transitions, Plant said the LEAP-1B cutover to a new-technology blade had not yet occurred, although production should increase during the second half. He said the transition would likely occur in the first quarter or first half of 2027, though the date was not fixed. Howmet is also increasing output for the GTF Advantage program, with larger production gains expected through 2027. Howmet repurchased $300 million of stock during the second quarter at an average price of $251 per share, followed by another $200 million in July at an average price of $277. Year-to-date repurchases reached $800 million at an average price of $248 per share. About $700 million remained under the board’s authorization. The company also retired $186 million of debt during the quarter and entered into a cross-currency swap that management said would save about $12 million in annualized interest expense. Net debt to trailing EBITDA ended the quarter at 1.4 times following the CAM acquisition. Plant said the company expects leverage to return to approximately one times by year-end. Howmet raised its quarterly dividend 17% to $0.14 per share, payable in August. Third-quarter revenue guidance: $2.75 billion, plus or minus $10 million Third-quarter EBITDA guidance: $830 million, plus or minus $5 million Third-quarter EPS guidance: $1.35, plus or minus $0.01 Full-year revenue guidance: $10.05 billion, plus or minus $50 million Full-year EBITDA guidance: $3.23 billion, plus or minus $20 million Full-year EPS guidance: $5.27, plus or minus $0.04 Full-year free-cash-flow guidance: $1.9 billion, plus or minus $50 million Plant said the company expects to provide its first view of 2027 revenue during its third-quarter earnings call in November, adding that 2027 revenue is expected to increase from 2026 levels. Howmet Aerospace Inc is an industrial technology company that designs, manufactures and repairs engineered metal products for the aerospace, transportation and industrial markets. Its product portfolio includes precision castings and forgings, engineered fasteners, seamless rolled rings, and complex components for turbine engines, airframes and industrial gas turbines. The company also provides aftermarket services such as component repair, overhaul and parts distribution to support the operating fleet of commercial and military customers. Howmet serves a global customer base of original equipment manufacturers (OEMs) and aftermarket operators, with manufacturing, service and distribution facilities across North America, Europe and Asia. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Howmet Aerospace Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Organic revenue growth accelerated to 21% in Q2, driven by robust demand across commercial aerospace, defense, and particularly industrial gas turbines (IGT). IGT revenue surged 38% as data center electricity needs drive unprecedented demand for natural gas power generation, prompting customers to repeatedly revise demand outlooks upward. Commercial aerospace growth of 28% was supported by both new build rates and high spares demand across legacy and next-generation engine platforms. EBITDA margins expanded 340 basis points to 32.1%, successfully absorbing the dilutive impact of the CAM acquisition through strong operational execution and high incremental margins. The company is leveraging its 50%+ market share in IGT turbine blades to drive growth, utilizing yield improvements and new facility expansions in Japan and Europe. Management attributes the strong performance to a balanced portfolio where spares now represent 22% of total revenue, providing a high-margin buffer against OE volatility. Capital expenditure is expected to exceed $500 million in 2026 with a further significant step-up planned for 2027 to support contracted growth in aerospace and IGT. Management expects to return leverage to approximately 1.0x net debt-to-EBITDA by year-end 2026, maintaining the same level as 2025 despite $2 billion in recent acquisitions. The CAM acquisition integration is focused on 2027 for realizing significant synergies, particularly through IT modernization and shifting to internal distribution channels. Guidance for 2026 was raised across all metrics, reflecting growing confidence in commercial truck recovery and sustained aerospace build rate increases into 2027. Future growth is predicated on new product introductions and technology shifts from Equiax to directionally solidified and single crystal turbine blades. Aluminum cost pass-throughs in the Forged Wheels segment diluted margins by 360 basis points year-over-year, though the impact on absolute EBITDA dollars was neutral. The divestiture of the Savannah disk forging facility resulted in a 13% revenue decline for the Engineered Structures segment as the company pivots toward higher-margin opportunities. Management addressed potential long-term competition from space-based data centers, dismissing them as a viable threat until at least the 2040s due to launch and maintenance constraints. Defense spares demand remains solid, but management noted that a potential 'bubble' of demand from recent Middle East mission activity has not yet hit the order book. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Howmet holds over 50% global market share in IGT turbine blades; growth is currently limited by the company's willingness to invest in new capacity. New capacity commitments made today would likely not result in delivered product until 2028 or 2029 due to long lead times for specialized machinery. Growth is being driven by a shift toward cored blades and single crystal technology, where Howmet maintains a significant technical advantage. Management is seeing a tangible pull for wide-body components, anticipating Boeing 787 rates reaching 9 or 10 per month by late 2027. Howmet's manufacturing equipment is largely fungible between narrow-body and wide-body platforms, providing flexibility to meet shifting OEM demands. The company recently committed to building a new plant to ensure it stays ahead of the aggregate demand from all aircraft platforms. Management signaled a predisposition toward further 'bolt-on' acquisitions in the $1 billion to $2 billion range rather than 'mega-large' transactions. Share buybacks in 2027 are expected to exceed 2026 levels, supported by strong free cash flow and a 90% conversion target. Dividend growth is likely to pause for the next 12 months following the recent 17% increase to allow for integration and debt reduction.

Howmet Aerospace Inc. HWM used its second-quarter call to emphasize capacity expansion across commercial aerospace and industrial gas turbines, where customer demand is extending beyond 2026.Alongside higher full-year guidance, executives highlighted spares activity, 2027 capital needs and CAM integration, while analysts focused on how quickly Howmet can add capacity without overbuilding. Second-quarter revenue of $2.55 billion topped the $2.41 billion Zacks Consensus Estimate, while adjusted earnings of $1.33 per share exceeded the $1.23 Zacks Consensus Estimate. Revenue rose 24% year over year, with organic growth of 21%. Howmet Aerospace Inc. price-consensus-eps-surprise-chart | Howmet Aerospace Inc. Quote Executive chairman and CEO John Plant raised full-year guidance baselines to revenue of $10.05 billion, adjusted EBITDA of $3.23 billion, adjusted earnings of $5.27 per share and free cash flow of $1.9 billion.Plant set third-quarter guidance baselines at revenue of $2.575 billion, adjusted EBITDA of $830 million and adjusted earnings of $1.35 per share, while incorporating normal third-quarter seasonality. Howmet Builds for Multi-Year IGT DemandExecutive vice president and CFO Patrick Winterlich said gas turbine revenue rose 38% as electricity-generation demand, especially from natural gas for data centers, remained strong. A Jefferies analyst pressed on competitive positioning. Executive chairman and CEO John Plant said Howmet holds more than 50% global share in industrial gas turbine blades and is expanding in Japan, Europe and Virginia.A Bernstein analyst asked how quickly the company can respond. Plant said a new equipment commitment made now would take about two years to arrive, with larger additions extending through 2028, 2029 and 2030. Executive chairman and CEO John Plant said aircraft backlogs support higher build rates through the balance of 2026, into 2027 and beyond. Howmet also committed to another commercial aerospace plant expansion shortly before the call. A Vertical Research analyst asked about wide-body production. Plant said Boeing 787 demand is moving toward Rate 10, while Airbus A350 production could move from roughly five or six per month to eight or nine over the next year. An RBC Capital Markets analyst questioned supply-chain capacity. Plant stressed that Howmet will add capacity, but will monitor demand durability and avoid investing around a single-year peak. Executive vice president and CFO Patrick Winterlich said commercial aerospace revenue increased 28%, including 26% organic growth, while defense aerospace rose 11%. Total spares revenue increased 37% to about $460 million. A Melius Research analyst asked whether recent military utilization was already lifting demand. Executive chairman and CEO John Plant said Howmet had not seen an order increase from additional missions, though customer discussions point to stronger spares requirements in 2027. Plant added that missile customers are asking Howmet to consider rate increases across several programs. No formal incremental orders were in hand, leaving demand durability to be resolved before dedicated capacity is added. A Baird analyst focused on CAM integration. Executive chairman and CEO John Plant said early work centered on IT systems, employee benefits and the asset base, with some purchasing benefits expected in the second half of 2026 and most synergies in 2027. Plant said CAM is expected to be about neutral to earnings per share in 2026 before contributing positively in 2027. Fastening Systems adjusted EBITDA margin was 30.1%. A Citigroup analyst asked about cash deployment. Plant said Howmet is open to additional bolt-on M&A and expects 2027 share repurchases to exceed 2026 levels. Through July, repurchases totaled $800 million. Executive chairman and CEO John Plant balanced demand-driven expansion with caution on end-market durability. He said capital expenditures will exceed $500 million in 2026 and rise again in 2027 to support aerospace and gas turbine capacity. Plant maintained a 90% free-cash-flow conversion target and said Howmet expects to provide its first 2027 revenue outlook in November, with revenue anticipated to increase from 2026. HWM carries a Zacks Rank #2 (Buy), a favorable near-term rank in the Zacks framework. Its Growth Score of B is stronger than its Momentum Score of C, Value Score of F and VGM Score of D. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks Style Scores complement the Zacks Rank, with A and B grades preferred for the relevant style. The current Zacks Rank can change as earnings estimates are revised following the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research