Here's Why it is Worth Investing in Howmet Stock Now

Howmet Aerospace Inc. HWM stands to benefit from strength across its businesses, focus on operational excellence and solid liquidity position. The company remains focused on investing in growth opportunities and strengthening its long-term market position.

HWM, which has a market capitalization of $39.4 billion, currently sports a Zacks Rank #1 (Strong Buy). Let's delve into the factors that have been aiding the firm for a while now.

End-Market Strength: Howmet is benefiting from solid momentum in the commercial aerospace market. Solid demand for engine products, supported by higher build rates, spares growth and robust backlogs are driving the segment's performance. Revenues from the commercial aerospace market increased 27% year over year in the second quarter of 2024, constituting more than 50% of its business.

While the commercial aerospace market has remained a major driver, the defense side of the 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.

Strong Liquidity Position: The company's sound liquidity position is an added positive. Exiting the second quarter, Howmet's cash equivalents and receivables were $1.52 billion against short-term maturities of $782 million. This implies that it has sufficient cash to meet its current debt obligations.

Shareholder-Friendly Policies: Howmet remains committed to increasing shareholders' value through dividend payments and share repurchases. For instance, in the first six months of 2024, it paid dividends worth $42 million and repurchased shares for $210 million. Also, in 2023, the company paid dividends of $73 million and repurchased shares worth $250 million. In July 2024, it hiked its dividend by 60% to 8 cents per share (annually: 32 cents).

Price Performance of HWM

Image Source: Zacks Investment Research

Year to date, the company's shares have surged 78.4%, higher than the industry's 30.2% growth.

Estimate Revisions: It's worth noting that the Zacks Consensus Estimate for HWM's 2024 earnings is pegged at $2.56 per share, indicating an increase of 7.1% from the 60-day-ago figure. The consensus estimate for 2025 earnings is pegged at $3.16 per share, indicating an increase of 8.2% from the year-ago period.

Other Key Picks

Other top-ranked stocks from the same space are discussed below.

Quanta Services PWR currently carries a Zacks Rank # 2 (Buy).

PWR delivered a trailing four-quarter average earnings surprise of 4.6%. In the past 60 days, the Zacks Consensus Estimate for Quanta Services' 2024 earnings has inched up 0.4%.

Crane Company CR presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%. In the past 60 days, the consensus estimate for CR's 2024 earnings has increased 1.6%.

Sterling Infrastructure, Inc. STRL presently has a Zacks Rank of 2. STRL delivered a trailing four-quarter average earnings surprise of 17.4%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 6.8%.

To read this article on Zacks.com click here.