Howmet Aerospace Inc. (NYSE: HWM)

Sector: Industrials Industry: Aerospace & Defense CIK: 0000004281
Market Cap 99.61 Bn
P/B 18.17
P/E -156.86
P/S 7.95
ROIC (Qtr) 21.15
Div Yield % 0.18
Rev 1y % (Qtr) 14.65
Total Debt (Qtr) 3.05 Bn
Debt/Equity (Qtr) 0.57
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About

Howmet Aerospace Inc., often recognized by its stock symbols like NYSE:HWM, operates in the aerospace and transportation industries. This global company boasts advanced engineered solutions and has a presence in 20 countries, serving a multitude of markets with its diverse range of products and services. Howmet Aerospace Inc.'s primary businesses encompass jet engine components, aerospace fastening systems, and airframe structural components. These are crucial for mission-critical performance and efficiency in aerospace and defense applications....

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Investment thesis

Bull case

  • Strong operating cash flow of 1.88B provides robust 0.62x coverage of total debt 3.05B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 742M provide 3.88x coverage of short-term debt 191M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.88B provides exceptional 12.48x coverage of interest expenses 151M, showing strong debt service capability.
  • Operating cash flow of 1.88B provides strong 25.81x coverage of stock compensation 73M, indicating sustainable incentive practices.
  • Robust free cash flow of 1.43B exceeds capital expenditure of 453M by 3.16x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 1.88B barely covers its investment activities of (438M), with a coverage ratio of -4.30, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.88B provides thin coverage of dividend payments of (181M) with a -10.41 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (438M) provide weak support for R&D spending of 37M, which is -11.84x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 1.43B represents just -5.02x of debt issuance (285M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 4.09B provide limited buffer against comprehensive income items of (1.67B), which is -2.45x, indicating elevated exposure to market risks.

Geographical Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Aerospace & Defense
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GE General Electric Co 347.18 Bn 39.89 7.57 20.49 Bn
2 RTX RTX Corp 272.90 Bn 40.54 3.08 39.51 Bn
3 BA Boeing Co 185.24 Bn 98.01 2.07 54.10 Bn
4 LMT Lockheed Martin Corp 151.16 Bn 30.13 2.01 21.70 Bn
5 NOC Northrop Grumman Corp /De/ 100.62 Bn 24.06 2.40 17.02 Bn
6 HWM Howmet Aerospace Inc. 99.61 Bn -156.86 7.95 3.05 Bn
7 GD General Dynamics Corp 94.33 Bn 27.82 2.39 8.01 Bn
8 TDG TransDigm Group INC 75.70 Bn 41.87 8.31 30.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 9.47 2.53
EV to Cash from Ops. EV/CFO 814.07 74.76
EV to Debt EV to Debt 34.70 70.01
EV to EBIT EV/EBIT 73.24 8.56
EV to EBITDA EV/EBITDA 55.03 28.68
EV to Free Cash Flow [EV/FCF] EV/FCF -124.95 73.68
EV to Market Cap EV to Market Cap 1.06 1.05
EV to Revenue EV/Rev 8.45 9.46
Price to Book Value [P/B] P/B 18.17 7.10
Price to Earnings [P/E] P/E -156.86 21.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 8.33 -3.71
Dividend Payout Ratio % Div Payout % (Qtr) 11.80 18.88
Dividend per Basic Share Div per Share (Qtr) 0.46 0.72
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 12.99 11.28
Interest Coverage Int. cover (Qtr) 13.19 -10.55
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -41.12 -77.00
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 31.56 27,757.82
Dividend Growth (1y) % Div 1y % (Qtr) 48.39 1.15
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 24.85 -9.06
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 21.94 11.61
EBIT Growth (1y) % EBIT 1y % (Qtr) 27.22 -0.09
EBT Growth (1y) % EBT 1y % (Qtr) 33.04 -31.50
EPS Growth (1y) % EPS 1y % (Qtr) 31.80 -100.94
FCF Growth (1y) % FCF 1y % (Qtr) 46.47 26.50
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 22.03 -1.44
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.74 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.08 0.03
Cash Ratio Cash Ratio (Qtr) 0.42 1.78
Current Ratio Curr Ratio (Qtr) 2.13 3.60
Debt to Equity Ratio Debt/Equity (Qtr) 0.57 0.32
Interest Cover Ratio Int Coverage (Qtr) 13.19 -10.55
Times Interest Earned Times Interest Earned (Qtr) 13.19 -10.55
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 27.60 -309.23
EBIT Margin % EBIT Margin % (Qtr) 24.13 -340.98
EBT Margin % EBT Margin % (Qtr) 22.30 -345.99
Gross Margin % Gross Margin % (Qtr) 34.20 -51.92
Net Profit Margin % Net Margin % (Qtr) 18.30 -347.41