Howmet Aerospace
HWM · NYSEAerospace & Defense · Jet Engine Castings
Since the Report − 13.8%
Close on Report DayAug 6
$301.39▲ 3.4%Report-Day Move
- Market Cap(Today)
- ≈ $104 B
- 1Y Return(At Report)
- + 67%
- P/E($4.55 · Trailing 12M)
- 57.1
- PEG(company guidance 2026)
- 1.44
- Net Margin(Trailing 12M)
- 20.5%
Howmet closed the quarter above the high end of its own guidance and lifted the full-year revenue target by roughly $400 million; the stock set a record, yet the price already appears to embed most of that optimism.
Revenue (Q2)
$2.55B
▲ 24% YoY
Adjusted EPS
$1.33
▲ 46% · Above Expectations
Adjusted EBITDA Margin
32.1%
▲ 340 Bps
Engine Products Revenue
$1.37B
▲ 32% · 37.7% Margin
Free Cash Flow
$479M
▲ 39%
Full-Year Revenue Guidance
~$10.05B
Raised From $9.65B
Quarterly Revenue ($ Billion)
2.05
2.09
2.17
2.31
2.55
2.565–2.585
- Q2 25
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26E
- Annual Revenue Growth
- ▲ 24%21% Excluding the Acquisition
- Engine Products Share
- 54% of revenue▲ 32% YoY · 37.7% Margin
- Engineered Structures
- $269M▼ 13% · Portfolio Pruning
Q3 2026 Company Guidance
- Q3 Revenue2.565 – 2.585 billion
Midpoint 2.575 · Market Expectation 2.48Entire Range Above Expectation ▲
- Q3 Adjusted EPS1.34 – 1.36 $
Midpoint 1.35 · Market Expectation 1.26Entire Range Above Expectation ▲
- Q3 Adjusted EBITDA Margin32.2% – 32.3%
32.1% delivered in Q2Slightly Above ▲
- Full-Year Revenue10.0 – 10.1 billion
Midpoint 10.05 · Prior target ~9.65Raised by $400M ▲
- Full-Year Adjusted EBITDA3.21 – 3.25 billion
Midpoint 3.23 · Market Expectation 3.12Entire Range Above Expectation ▲
The blue band is the company's low–high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. Axis is ±7.7% around the midpoint.
- Free Cash Flow (Q2)
- $479M▲ 39% · FY Target $1.85-1.95B
- Share Buybacks
- $800MThrough End-July · $300M in Q2
- Quarterly Dividend
- $0.14▲ 17% · Payable August 25
“Looking ahead, Howmet is well positioned, with all our major markets in growth mode. More robust build rates for commercial aircraft are supported by record backlogs, while engine spares needs continue to increase.”
- Extraordinary gas turbine demand
- Higher 2027 capital spending
- Dividend raised 17%
Summary
Howmet Aerospace posted $2.55 billion of revenue in the second quarter of 2026 — up 24% from a year earlier, or 21% once the acquisition contribution is stripped out, and roughly 5% above the Market Expectation of $2.43 billion. Adjusted earnings per share came in at $1.33, a 46% year-over-year increase and about 6% ahead of the Market Expectation. The more striking line is profitability: adjusted EBITDA reached $817 million and the margin hit 32.1%, a 340 basis point expansion in twelve months. In plain terms, the company now pulls $3.40 more of cash profit out of every $100 of sales than it did a year ago. Net income was $534 million and free cash flow $479 million, up 39%. Management says every one of these measures came in above the high end of its own guidance.
The stock closed up about 3.4% at $301.39 on results day, touching an all-time high of $310 intraday. What drove the move was less the quarter itself than the size of the guidance raise: the full-year revenue target went from roughly $9.65 billion to $10.05 billion, adjusted EPS from $4.94 to $5.27, and free cash flow from $1.75 billion to $1.90 billion. On top of that came a 17% dividend increase and $800 million of buybacks through the end of July. Even so, a 3% pop is telling. The shares are up roughly 67% over the past year and, at a price-to-earnings ratio near 67, already discount a good deal of the future margin. It is the tension this site keeps returning to: a strong quarter does not automatically buy a big move.
Our read on the quarter itself is positive, and the score is 87. The logic is simple: revenue, margin, cash and guidance all improved at once, and the growth is not tied to a single customer or a single aircraft programme — commercial aerospace grew 28%, gas turbines 38% and defense 11%. The reservation sits in the price rather than the story: the average analyst target is only marginally above the closing level, capital spending is set to rise in 2027, and Engineered Structures, the weakest link, keeps shrinking. This is an assessment of the quarter, not a recommendation on the stock. If you want to refresh the underlying logic, our valuation guide is a good starting point.
Full Review
ClaudeEngine Products carries the company almost single-handedly.
Engine Products generated $1.37 billion of revenue in the quarter, up 32% year over year. That single segment is roughly 54% of total revenue, which means anyone looking at Howmet is largely looking at jet engine castings. Segment adjusted EBITDA rose to $517 million, a 51% jump that far outpaced revenue growth, and the margin reached 37.7% after expanding 470 basis points in a year — the highest and fastest-improving margin of the four segments. The driver is mix: spares that go into maintaining engines already in service are taking a larger share versus parts destined for new engine builds, and those spares are meaningfully more profitable. As CEO John Plant put it, engine spares needs continue to increase. The more hours the global fleet flies, the tighter the maintenance cycle gets, and that is a multi-year trend rather than a one-quarter swing.
Gas turbines add a second engine alongside aerospace.
The line that reminds investors Howmet is not purely an aircraft company is gas turbines: that end market grew 38% in the quarter, outpacing even commercial aerospace. The demand comes from power generation — as data centres and AI infrastructure pressure grid operators to add capacity, the need for hot-section components in natural gas turbines climbs with it. Management describes the demand as extraordinary and says customers are already revisiting and adding to their demand outlooks. What matters for investors is that this business provides a growth source independent of aircraft build rates. If aerospace slows, turbines can cushion the blow. Because these parts also require high-temperature alloys, they share the same plants and broadly the same margin structure.
Aerospace build rates finally favour Howmet.
Commercial aerospace revenue rose 28% year over year, driven by the long-delayed production rate increases at Boeing and Airbus, which Howmet notes are supported by record backlogs. Because Howmet sits near the front of the supply chain, it feels every rate increase months before an aircraft is delivered. Defense grew a more measured 11%, but the company calls demand healthy and points to missiles, drones and collaborative combat aircraft as medium-term growth drivers. Two end markets moving together means revenue is not hostage to any one programme. It also shows where the risk lives: a step back in Boeing's or Airbus's monthly production plan would work its way into Howmet's order book with a lag of a couple of quarters.
Guidance goes up and cash goes back to shareholders.
The full-year outlook given in May was $9,575–9,725 million of revenue and $4.88–5.00 of adjusted earnings per share. With these results the target moves to $10.0–10.1 billion of revenue and $5.23–5.31 of EPS — roughly $400 million more revenue and about 7% more profit. The free cash flow target rises to $1.85–1.95 billion. Third-quarter guidance calls for $2.565–2.585 billion of revenue and $1.34–1.36 of adjusted EPS, so management is signalling the momentum continues. On capital allocation, the company repurchased $300 million of stock in the quarter and $800 million year to date through July, repaid a $186 million yen-denominated term loan, and raised the quarterly dividend 17% to $0.14 per share. The $1.8 billion CAM acquisition completed in early April is described as integrating on track, with leverage expected to return to pre-deal levels in short order.
Engineered Structures shrank, but by design.
Engineered Structures revenue fell 13% to $269 million — the only contraction among the four segments. The cause is not soft demand: the company divested its Savannah disk forging facility and is rationalising lower-margin products out of the portfolio. Despite the smaller top line, the segment margin expanded 170 basis points to 23.8%, which suggests the pruning is doing its job. Forged Wheels grew 14% to $316 million at a 27.8% margin; tied to the heavy commercial truck market, it follows a different cycle from aerospace and is the piece most exposed to an economic slowdown. Fastening Systems jumped 37% to $589 million, though a significant share of that comes from the CAM acquisition — separating organic growth will take another quarter or two of reporting.
The real debate is about price, not the print.
The shares are up roughly 67% over the past year and set a record at $310 on results day. At that level the price-to-earnings ratio sits in the 65–70 range, a rich multiple for most of the aerospace supply chain. Target increases followed the print — JPMorgan to $310 from $265, TD Cowen to $320 from $300, BTIG to $300 from $275 — yet across data providers the average target from 22 analysts ranges between $300 and $313, leaving only single-digit upside versus the close. The sources conflict on the exact figure; what is clear is that the stock now trades at the low end of the average target. That does not make the quarter a bad one. It means everything the company is doing right is already in the price, and what comes next depends on whether guidance can be raised again.
Strengths
6- Revenue, adjusted EBITDA, margin and earnings per share all came in above the high end of the company's own guidance.
- Adjusted EBITDA margin of 32.1% expanded 340 basis points in a year — growth is enhancing profitability, not diluting it.
- Engine Products grew revenue 32% while lifting EBITDA 51% and the margin to 37.7%; the spares mix is doing the work.
- Three end markets are growing at once: commercial aerospace 28%, gas turbines 38%, defense 11%. Revenue is not tied to one programme.
- Full-year revenue guidance rose about $400 million, EPS about 7%, and free cash flow about $150 million.
- The dividend was raised 17%, $800 million of stock was repurchased through July, and a $186 million loan was repaid.
Risks
6- The price-to-earnings ratio sits in the 65–70 range; most of the good news is already reflected in the shares.
- The average analyst target is only marginally above the close, ranging from $300 to $313 depending on the data provider.
- More than half of the growth comes from Engine Products; any slowdown there would pull the whole company down quickly.
- A step back in Boeing's or Airbus's production rate plan would hit Howmet's order book with a lag of a few quarters.
- Capital spending is rising and management says it will rise further in 2027, which could weigh on free cash flow.
- Forged Wheels is tied to the heavy commercial truck market and is the most cyclical piece; Engineered Structures keeps shrinking.
What to Watch
6- August 7, 2026: record date for the increased dividend. The $0.14 per share payment goes out on August 25, 2026.
- Q3 guidance: $2.565–2.585 billion of revenue and $1.34–1.36 of adjusted EPS. Results are due around early November 2026.
- Full-year targets to track: $10.0–10.1 billion of revenue, $5.23–5.31 of EPS and $1.85–1.95 billion of free cash flow.
- Integration of the $1.8 billion CAM acquisition completed in early April, and the return of leverage to pre-deal levels.
- The 2027 capital spending plan: management has flagged an increase, with the figure expected to firm up later this year.
- Boeing and Airbus monthly build rates plus the flow of engine spares orders will set the direction of the next quarter.
Upcoming Earnings
To Understand This