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Here's Why It is Worth Investing in Howmet (HWM) Stock Now

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·3 min read
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Howmet Aerospace Inc. HWM is well poised for growth, courtesy of strength across its businesses, healthy liquidity position, solid product portfolio and a sound capital-deployment strategy.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The currently Zacks Rank #2 (Buy) player has a market capitalization of $15.1 billion. In the past three months, the stock has gained 8.8% compared with the industry’s growth of 5.9%.

Let’s delve into the factors that make HWM a smart investment choice at the moment.

Strong Business: Howmet stands to gain from its presence in the diverse end markets, which allows it to offset risks associated with a single market. In the quarters ahead, strength in the end markets like commercial transportation, aerospace-commercial, industrial gas turbine and others will likely benefit HWM. Its revenues from commercial transportation and commercial aerospace grew 10% and 29% year over year, respectively, in the first quarter of 2022. Its second-quarter revenues are projected in the range of $1.35-$1.39 billion.

Healthy Liquidity Position: HWM’s solid liquidity position has been aiding it over time. Howmet had an available cash balance of $522 million and a revolving credit facility of $1 billion (set to mature in September 2026), exiting first-quarter 2022. HWM predicts an adjusted free cash flow of $575-$675 million for 2022.

Shareholder-Friendly Policies: Howmet focuses on rewarding its shareholders through dividend payments and share buybacks. In the first three months of 2022, HWM used $9 million for paying out dividends and repurchasing shares worth $175 million. It is worth noting that HWM repurchased 3 million shares for $100 million in January 2022.

Solid Initiatives: HWM’s solid product portfolio, effective pricing and cost-reduction efforts are likely to drive its performance over time. Howmet anticipates earnings (excluding special items) of $1.33-$1.45, with the mid-point at $1.39, for 2022. The midpoint is above $1.01 recorded in 2021. The second-quarter 2022 earnings are predicted to be 31-33 cents per share.

Northbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for 2022 earnings has moved up from $1.38 to $1.41 on four upward estimate revisions versus none downward. The consensus estimate for 2023 earnings has increased from $1.80 to $1.82 on two northward estimate revisions against none southward.

Zacks Rank & Other Stocks to Consider

Some other top-ranked companies from the industrial products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AIT’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have rallied 5.2% in the past three months.

Roper Technologies, Inc. ROP presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 2%, on average.

In the past 60 days, ROP’s earnings estimates have increased 1.2% for 2022. The stock has declined 0.5% in the past three months.

IDEX Corporation IEX is presently Zacks #2 Ranked. IEX’s earnings surprise in the last four quarters was 2.8%, on average.

In the past 60 days, the stock’s earnings estimates have increased 3.4% for 2022. The stock has increased 1.8% in the past three months.


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Roper Technologies, Inc. (ROP) : Free Stock Analysis Report
 
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
 
IDEX Corporation (IEX) : Free Stock Analysis Report
 
Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report
 
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