Howmet Aerospace Inc. HWM reported better-than-expected second-quarter 2026 results on Aug. 6. Earnings per share surpassed the Zacks Consensus Estimate by 8.1% and surged 46% year over year.
Total revenues of $2.55 billion surpassed the consensus estimate of $2.41 billion and increased 24% year over year. The second-quarter results benefited from persistent strength in its commercial and defense aerospace markets.
HWM has been reporting strong earnings results courtesy of solid financial and operational performance from its segments. Backed by robust results and improving fundamentals, the company lifted its financial outlook. For 2026, Howmet Aerospace raised its revenue outlook to $10.00-$10.10 billion from $9.575-$9.725 billion. Adjusted EBITDA is now anticipated between $3.21 billion and $3.25 billion, higher than $3.025-$3.095 billion expected earlier. It also raised its adjusted earnings to $5.23-$5.31 per share from $4.88-$5.00.
Factors Contributing to Howmet Aerospace’s Performance
The strongest driver of Howmet Aerospace’s business at the moment is the commercial aerospace market. The strength in air travel continues, with both narrow and wide-body aircraft demand picking up, supporting continued OEM spending. Pickup in air travel has been positive for the company as the increased usage of aircraft spurs spending on parts and products that it provides.
In the second quarter of 2026, revenues from the commercial aerospace market surged 28% year over year, constituting 53% of the company’s business. Also, in the first quarter, revenues from the market increased 20% year over year. The sustained strength was attributed to increasing demand for engine spares and a record backlog for new, more fuel-efficient aircraft with reduced carbon emissions. Also, healthy build rates at Airbus for A320 and A350 aircraft, along with a production recovery in the Boeing 737 MAX aircraft, hold promise for HWM’s spare engine demand.
Expanding the defense budget remains another growth catalyst for Howmet Aerospace. The defense aerospace industry has also been witnessing positive momentum, cushioned by steady government support. HWM has been witnessing robust orders for engine spares for the F-35 program and spares for other legacy fighters. In the second quarter, revenues from the defense aerospace market increased 11% year over year, constituting 15% of the company’s revenues.
It's worth noting that the fiscal year 2026 Defense Appropriations Act was signed into law in February 2026, providing a strong budgetary allocation for defense. Such robust provisions set the stage for GE Aerospace, which remains focused on its defense business.
HWM also remains open to strengthening its business through acquisitions. In April 2026, it completed the acquisition of Stanley Black’s business unit, Consolidated Aerospace Manufacturing LLC (“CAM”), for $1.8 billion. CAM’s well-known brands, engineering expertise and strong customer relationships have strengthened its aerospace fastening solutions portfolio.
The company also remains committed to increasing shareholder value through dividend payouts and share repurchases. For instance, in the first six months of the year, it paid dividends worth $97 million. In July 2026, the company hiked its dividend by 17% to 14 cents per share (annually: 56 cents). Also, year to date through July, it repurchased shares worth $800 million.
HWM Shares Outperform Industry, S&P 500 & Peers
Shares of the company have gained 57.3% in the past year compared with the industry’s and the S&P 500 composite’s growth of 4.7% and 22.8%, respectively. It has also outperformed other industry players like RTX Corporation RTX and Textron Inc. TXT, which have returned 44.7% and 12.9%, respectively, over the said time frame.
HWM Stock’s Price Performance
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Earnings Estimate Revision
Earnings estimates for HWM have moved north over the past 60 days, reflecting analysts’ optimism.
The Zacks Consensus Estimate for 2026 earnings increased 5.5% to $5.18 per share, suggesting year-over-year growth of 37.4%. The consensus mark for 2027 earnings moved up 3.4% to $6.05 per share, indicating a year-over-year increase of 16.8%. As earnings estimates increase, the stock is likely to follow suit.
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Valuation Remains an Overhang
The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 50.98X, higher than the industry average of 34.49X. Also, it is overvalued compared with its peers, RTX Corp. and Textron. Notably, RTX Corp. and Textron are trading at 29.69X and 12.74X, respectively.
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Final Take on HWM
Solid momentum across the commercial and defense aerospace markets, supported by impressive build rates, spare demand for engines and a robust defense budget, positions Howmet Aerospace favorably for strong growth in the quarters ahead. Built on a sound liquidity position, HWM’s shareholder-friendly policies also add to its appeal.
Despite its expensive valuation, positive analyst sentiment and robust growth prospects indicate it is the right time for potential investors to bet on this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).