Howmet Aerospace shares draw rebound case after selloff
A steep pullback in Howmet Aerospace shares is shifting investor focus to whether the jet-engine components supplier’s earnings momentum and capital returns still support the stock. The Pittsburgh-based company remains exposed to concerns about future competition, but its latest results and raised outlook point to continued near-term operating strength.
Highlights
- Howmet Aerospace's Q3 revenue increased 29% year over year to $2.7 billion and adjusted EPS rose 54% to $1.46, beating estimates.
- Management raised Q4 and full-year EPS guidance to $1.49–$1.51 and $5.45–$5.51 respectively, and expanded the share repurchase authorization to $5.4 billion.
- Despite a 30% stock decline since August due to competition concerns from GE Aerospace and SpaceX, analysts expect over 35% rebound in the next 12 months.
Earnings growth and buybacks support the case
As reported by CNBC, Howmet Aerospace is still posting strong growth despite pressure on its share price and concerns about new rivals in turbine parts. In its third-quarter results, revenue rises 29% from a year earlier to $2.7 billion, including 25% organic growth, while adjusted earnings per share climbs 54% to $1.46, above Wall Street’s $1.37 estimate.The company also shows strong profitability, with adjusted EBITDA margin reaching 32.5%. Management raises fourth-quarter earnings-per-share guidance to $1.49 to $1.51, ahead of the $1.42 analyst consensus, and lifts full-year EPS guidance to $5.45 to $5.51.
Howmet is also directing significant cash to shareholder returns. The company repurchases $1.1 billion of stock so far this year, and at the end of last month increases authorization for its share-purchase program to $5.4 billion from $5 billion.
Competition fears weigh on valuation
Investor caution centers on the risk that new competition could erode Howmet’s position in high-performance turbine components. GE Aerospace is acquiring a rival turbine-parts supplier, while SpaceX plans to make its own turbine blades, developments that raise questions about future market share and pricing power.Even so, the market reaction appears severe relative to current operating performance. Howmet’s stock falls roughly 30% from its August high despite the stronger earnings report, suggesting investors are pricing in a more immediate competitive threat than the business results currently indicate.
Analysts still see meaningful upside, with expectations that the shares can rebound by more than 35% over the next 12 months. That leaves the company positioned as a closely watched aerospace supplier whose near-term fundamentals remain strong while the longer-term competitive picture continues to develop.
Previously, we highlighted how the S&P 500 rally faced an earnings and rates test as yields stayed elevated.
Latest Howmet Aerospace Inc News
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