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Howmet Aerospace (NYSE:HWM) Has Compensated Shareholders With A Respectable 54% Return On Their Investment

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Simply Wall St
·3 min read
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Investors can buy low cost index fund if they want to receive the average market return. But in any diversified portfolio of stocks, you'll see some that fall short of the average. Unfortunately for shareholders, while the Howmet Aerospace Inc. (NYSE:HWM) share price is up 16% in the last three years, that falls short of the market return. Unfortunately, the share price has fallen 16% over twelve months.

View our latest analysis for Howmet Aerospace

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Howmet Aerospace became profitable within the last three years. That would generally be considered a positive, so we'd expect the share price to be up.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
earnings-per-share-growth

We know that Howmet Aerospace has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Howmet Aerospace's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Howmet Aerospace's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for Howmet Aerospace shareholders, and that cash payout contributed to why its TSR of 54%, over the last 3 years, is better than the share price return.

A Different Perspective

Howmet Aerospace produced a TSR of 9.7% over the last year. While you don't go broke making a profit, this return was actually lower than the average market return of about 31%. But the (superior) three-year TSR of 15% per year is some consolation. Even the best companies don't see strong share price performance every year. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Howmet Aerospace (of which 1 is significant!) you should know about.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.