Here's Why You Should Hold on to Howmet (HWM) Stock Now
Howmet Aerospace HWM is benefiting from continued recovery in the commercial aerospace end market, owing to a recovery in narrow-body. Revenues from commercial aerospace jumped 23% year over year in the third quarter.
While supply-chain disruptions are affecting volumes and limiting commercial truck production in the commercial transportation end market, pricing actions are supporting HWM’s top-line performance.
While weakness in the defense aerospace market and a decline in Boeing 787 production are weighing on the Engineered Structures segment’s performance, strength in the commercial aerospace market is driving revenues at the Engine Products (up 14% year over year in the third quarter) and Fastening Systems (up 15% year over year) segments.
Howmet Aerospace Inc. Price and Consensus
Howmet Aerospace Inc. price-consensus-chart | Howmet Aerospace Inc. Quote
Strength in commercial transportation due to higher aluminum prices and volumes is aiding the Forged Wheels (revenues up 15% year over year in the third quarter) segment. This Zacks Rank #3 (Hold) company expects the commercial aerospace recovery to continue, backed by improvement in narrow body production rates.
Howmet’s upbeat guidance for the fourth quarter of 2022 and the full year raises optimism in the stock. For the fourth quarter, the company expects revenues of $1.45-$1.5 billion. The mid-point of the guided range — $1.47 billion — is higher than $1.285 billion reported in the year-ago period. Adjusted earnings are expected to be 37-39 per share. The mid-point of the guided range — 38 cents — is higher than 30 cents reported in the year-ago period. Detailed results will be available on Feb 14.
For the full year, Howmet estimates revenues of $5.60-$5.65 billion. The mid-point of the guided range — $5.62 billion — is higher than $4.972 billion reported in 2021. Adjusted earnings are predicted to be $1.39-$1.41 per share. The mid-point of the guided range — $1.40 — is higher than $1.01 reported in the year-ago period.
Howmet’s measures to reward its shareholders are encouraging. The company paid out dividends of $27 million in the first nine months of 2022 compared with $11 million in the year-ago period. Also, it repurchased shares worth $335 million in the first nine months of 2022 compared with the $225 million buyback made a year ago.
Some better-ranked stocks in the Engineering - R and D Services industry are as follows:
Sterling Infrastructure, Inc. STRL carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for Sterling Infrastructure’s 2022 earnings has remained steady in the past 30 days. The same for 2023 earnings has been revised upward by 2.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
Sterling Infrastructure has an estimated earnings growth rate of 46.1% and 9.9% for 2022 and 2023, respectively. The stock has rallied approximately 43% in the past six months.
Fluor Corporation FLR carries a Zacks Rank of 2. The Zacks Consensus Estimate for the company’s 2022 and 2023 earnings has remained steady in the past 30 days.
Fluor has an estimated earnings growth rate of 2.1% and 83.3% for 2022 and 2023, respectively. The stock has appreciated nearly 48% in the past six months.
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