Howmet Aerospace stock weighs strong growth against higher investment

Howmet Aerospace delivered its strongest quarterly growth rate on record in the third quarter, according to the company's October 29 earnings release. Revenue for the three months ended September 30 increased 29% year over year to USD 2.703 billion, including organic growth of 25%. Adjusted earnings per share rose 54% to USD 1.46, while adjusted EBITDA increased 43% to USD 879 million.

Howmet Aerospace stock traded at 202.80 euros on Lang & Schwarz at 13:51 CET on Friday, November 13, 0.52 percent above the Xetra close of Thursday, November 12.

Growth broadens across core markets

Commercial aerospace revenue increased 32% from a year earlier, while defense aerospace revenue advanced 10%. Gas turbine revenue climbed 45%, reflecting higher output and market-share gains, and commercial transportation revenue increased 28%. Howmet said the commercial aerospace order backlog supports higher production volumes through 2027 and beyond.

The Engine Products segment generated USD 1.451 billion in third-party sales, up 33%, and lifted adjusted EBITDA 57% to USD 567 million. Its adjusted EBITDA margin expanded to 39.1%. Fastening Systems sales rose 41% to USD 630 million, helped by acquisitions and aerospace demand, although its margin declined to 29.4% because of the acquisition impact.

Engineered Structures sales fell 4% to USD 295 million after the divestiture of the Savannah disk forging facility. Excluding that divestiture, sales grew 8%. Forged Wheels revenue increased 32% to USD 327 million, but its margin narrowed as aluminum cost pass-through affected the comparison.

Higher guidance and capital demands

Howmet raised its full-year 2026 revenue guidance to a range of USD 10.290 billion to USD 10.310 billion, with a midpoint increase of USD 250 million. The company now expects adjusted earnings per share of USD 5.49 to USD 5.51 and free cash flow of USD 1.950 billion to USD 2.050 billion. Fourth-quarter guidance centers on revenue of USD 2.750 billion and adjusted earnings per share of USD 1.50.

Management also introduced an initial 2027 revenue outlook of approximately USD 11.5 billion. Chief Executive Officer John Plant said commercial aerospace demand remains supported by aircraft backlogs, while gas turbine customers are seeking volumes beyond earlier expectations. Howmet plans elevated capital spending beyond 2027 to expand aerospace, defense and gas turbine capacity.

Cash generation remains central to the investment case. Third-quarter free cash flow was USD 562 million after USD 147 million of capital spending. The company repurchased USD 500 million of common stock during the quarter, and the board added USD 5 billion to the existing authorization, bringing total available authorization to USD 5.397 billion.

Investors are balancing stronger earnings momentum and shareholder returns against the need for higher capacity spending. The key test will be whether aerospace and gas turbine demand converts into sustained volume growth without eroding margins during the investment cycle.

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