Howmet Aerospace Benefits From Business Strength Amid Headwinds

The strongest driver of Howmet Aerospace Inc.’s HWM business at the moment is the commercial aerospace market. The strength in air travel continues, with wide-body aircraft demand picking up, supporting continued OEM spending. Increased usage of aircraft has been driving demand for parts and products that the company provides, which has been again driving its sales. Revenues from the commercial aerospace market increased 17% year over year in the third quarter of 2024, constituting more than 50% of its business.The defense side of the aerospace industry has also been witnessing positive momentum, cushioned by steady government support. The company has been witnessing robust orders for engine spares for the F-35 program and spares and new builds for legacy fighters. Solid U.S budgetary provisions for the defense sector set the stage for HWM to focus on its business to win more contracts, which is likely to boost its top line.The company’s sound liquidity position supports its shareholder-friendly policies. Exiting the third quarter, Howmet Aerospace’s cash equivalents and receivables totaled $1.23 billion compared with its short-term maturities of $1 million. Also, in the first nine months of 2024, it paid dividends worth $76 million and repurchased shares for $310 million.In July 2024, the company hiked its quarterly dividend by 60% to 8 cents per share. In the same month, its board also approved an increase in the share repurchase program by $2 billion to $2.487 billion of its common stock.HWM’s Price PerformanceImage Source: Zacks Investment ResearchIn the past year, this Zacks Rank #3 (Hold) company’s shares have gained 114.6% against the industry’s decline of 6.3%.Despite the positives, softness in the commercial transportation market has been a major concern for the company. In third-quarter 2024, revenues from the commercial transportation market declined 12% on a year-over-year basis. The company expects demand in the commercial transportation markets served by the Forged Wheels segment to decline in the near term due to lower OEM builds.The escalating costs and expenses also pose a threat to HWM’s bottom line. For instance, in 2023, its cost of goods sold jumped 16.3% year over year while selling, general, administrative and other expenses increased 15.6%. The trend continued in the first nine months of 2024, with the cost of goods sold increasing 8.1% and selling, general and administrative expenses rising 8%, primarily due to an increase in employment costs.Key PicksSome better-ranked companies are discussed below.Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 (ending March 2025) earnings has been stable.Leidos Holdings, Inc LDOS presently carries a Zacks Rank #2 (Buy). LDOS delivered a trailing four-quarter average earnings surprise of 29.9%. In the past 60 days, the Zacks Consensus Estimate for Leidos’ 2024 earnings has increased 2.9%.Applied Industrial Technologies AIT presently carries a Zacks Rank of 2. AIT delivered a trailing four-quarter average earnings surprise of 4.8%.In the past 60 days, the consensus estimate for its fiscal 2025 earnings has increased 0.1%.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.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 Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report Graham Corporation (GHM): Free Stock Analysis Report Leidos Holdings, Inc. (LDOS): Free Stock Analysis Report Howmet Aerospace Inc. (HWM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks