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Price: $216.24
Discount category: Close to intrinsic value
Intrinsic value source: AI estimate
Next earnings: 2027-02-11
Next earnings is estimate: Yes
Company name: Howmet Aerospace
Sector: Aerospace components
About: Howmet Aerospace makes engineered metal parts for aircraft engines, airframes, gas turbines and trucks. It has four segments. Engine Products makes investment castings, including airfoils, and seamless rolled rings for aircraft engines and gas turbines, and it had third-party sales of $1.45 billion in Q3 2026. Fastening Systems makes aerospace, truck and industrial fasteners ($630 million). Engineered Structures makes titanium products, titanium and aluminum forgings and machined parts for airframes, engines and landing gear ($295 million). Forged Wheels makes forged aluminum wheels for heavy-duty trucks ($327 million). The main markets are commercial aerospace, defense aerospace, gas turbines and commercial transportation. Revenue was $8.3 billion in 2025. The company has about 1,200 granted and pending patents. The head office is in Pittsburgh, Pennsylvania, and John Plant is its executive chairman and chief executive officer.
Thesis: Howmet trades close to the AI estimate because investors already pay a high multiple for its strong growth and margins in aircraft engines and gas turbines. Revenue rose 29% to $2.70 billion in Q3 2026, and the adjusted EBITDA margin rose to 32.5% from 29.4%. The company expects 2026 adjusted EPS of $5.49 to $5.51, against $3.77 in 2025, and revenue of about $11.5 billion in 2027, up about 12%. For the stock to hold its value, three things must be true. Aircraft makers must raise build rates as planned, and demand for engine spares must stay strong. Gas turbine demand must keep growing: revenue in that market rose 45% in Q3 2026. Margins must hold while capital spending rises after 2027 and the company absorbs the CAM purchase. The Q4 2026 report with the 2027 guidance, expected in February 2027, is the next test. If aircraft output slows or customers delay orders, the stock can fall below the AI estimate.
Valuation: The intrinsic value for Howmet Aerospace is an AI estimate from November 10, 2026. It is not an analyst's value. An AI research agent calculated it from Howmet's filings. The method is a multiple of adjusted EPS for 2027. The third quarter 2026 release (8-K, October 29, 2026) gives Q3 2026 revenue of $2,703 million, adjusted EPS of $1.46 and an adjusted EBITDA margin of 32.5%. It raises the 2026 guidance to adjusted EPS of $5.49 to $5.51 and free cash flow of $1,950 million to $2,050 million, and it expects 2027 revenue of about $11.5 billion, up about 12%. The fourth quarter 2025 release (8-K, February 12, 2026) gives 2025 adjusted EPS of $3.77. The Form 10-Q for the quarter ended September 30, 2026 gives debt of $4,443 million, cash of $507 million and 397,660,490 shares outstanding on October 26, 2026. The multiple applies to EPS after interest, so the estimate does not subtract the debt again. EPS for 2027 and the multiples are assumptions. The low case assumes 2027 adjusted EPS of $6.20, about 13% growth, because aircraft build rates rise slowly, at 28 times. It gives $173.60 per share. The base case assumes $6.50, about 18% growth, in line with revenue growth of about 12% and a higher margin and buybacks, at 34 times. It gives $221.00 per share. The high case assumes $6.80, about 24% growth, with strong spares and gas turbine demand, at 40 times. It gives $272.00 per share. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is $221.90 per share. Switching costs and intangible assets are the main sources of the advantage. Engine and airframe makers must qualify each part on each platform, and a platform stays in production and service for decades, so customers seldom change suppliers. Engine Products had a segment adjusted EBITDA margin of 39.1% in Q3 2026, which shows pricing power. But a few large engine makers buy most of the products, and another large supplier competes for the same parts. The estimate expects the advantage to last 10 years or more, but not 20 years. As of 2026-11-10.
Risks: Most revenue depends on aircraft engine and airframe production. If aircraft and engine makers build fewer aircraft than planned, Howmet's growth slows. The stock already prices strong growth. A small miss against guidance, such as slower spares demand or a lower margin, can move the price a lot. Capital spending rises to support growth in aerospace and gas turbines, and the company expects more spending after 2027. If demand falls, the new capacity can lower returns. Tariffs and trade rules can raise the cost of nickel, titanium, cobalt and aluminum, or of parts that cross borders. The CAM purchase lowered the Fastening Systems margin to 29.4% in Q3 2026 from 30.8%. If the integration is slow, the expected synergies may not arrive.
Balance sheet: Cash: $507M Debt: $4.4B Net debt: $3.9B Interest cover: 16× Undrawn credit line: $1.0B, to February 2031 Debt due within 12 months: $391M Howmet funds itself with senior notes and commercial paper. At September 30, 2026, debt was $4.44 billion: $4.05 billion of long-term debt, $390 million of commercial paper and $1 million due within one year. Cash was $507 million. In March 2026, Howmet issued $1.2 billion of notes due 2028, 2029 and 2036 to fund the $1.8 billion CAM purchase, and in Q3 2026 it repaid $60 million of commercial paper. A $1.0 billion 5-year revolving credit facility, which matures on February 7, 2031, and a $600 million 364-day facility back the $1.0 billion commercial paper program, and neither facility had borrowings. Interest cover is operating income divided by net interest expense for the first nine months of 2026 ($2,241 million against $142 million). Total equity was $5.76 billion. In the first nine months of 2026, the company bought back shares for $1.1 billion and paid a quarterly dividend that rose to $0.14 per share in Q3 2026. There were 397,660,490 shares outstanding on October 26, 2026. As of 2026-09-30.
Checkpoints: Oct 29, 2026: Q3 2026 results and 2026 guidance. Passed. Watch: Results above guidance and higher 2026 guidance pass; lower guidance fails. Outcome: Revenue rose 29% and adjusted EPS rose 54% to $1.46, and Howmet raised its 2026 adjusted EPS guidance to $5.49 to $5.51. Feb 11, 2027 (estimate): Q4 2026 results and 2027 guidance. Pending. Watch: 2027 guidance with revenue near $11.5 billion and higher adjusted EPS passes; lower revenue guidance fails. May 2027 (estimate): Q1 2027 results: growth and margin. Pending. Watch: Revenue growth near 12% or more and a stable adjusted EBITDA margin pass; slower growth or a lower margin fail.
Recent events: 2026-10-29: Howmet reported Q3 2026 results. Revenue rose 29% to $2.70 billion, with organic growth of 25%. GAAP EPS was $1.42 and adjusted EPS was $1.46, up 54%. The adjusted EBITDA margin was 32.5%. Commercial aerospace revenue rose 32%, defense aerospace 10%, gas turbines 45% and commercial transportation 28%. The company raised its 2026 guidance to revenue of $10.29 billion to $10.31 billion and adjusted EPS of $5.49 to $5.51, and it expects revenue of about $11.5 billion in 2027. On October 28, 2026, the board added $5 billion to the share repurchase program, for a total authorization of $5.397 billion. 2026-08-06: Howmet reported Q2 2026 results. Revenue rose 24% to $2.55 billion, and GAAP and adjusted EPS were both $1.33. The company raised its 2026 guidance to adjusted EPS of $5.23 to $5.31. On July 27, 2026, the board raised the quarterly dividend by 17% to $0.14 per share. 2026-05-07: Howmet reported Q1 2026 results. Revenue rose 19% to $2.31 billion. GAAP EPS was $1.44 and adjusted EPS was $1.22. GAAP EPS includes a pre-tax gain of $93 million from the sale of the disk forging plant in Savannah, Georgia, for about $230 million on March 31, 2026. 2026-04-06: Howmet completed the purchase of Consolidated Aerospace Manufacturing (CAM) from Stanley Black & Decker for about $1.8 billion in cash. CAM makes precision fasteners, fluid fittings and other engineered parts for aerospace and defense. Howmet expected CAM revenue of about $485 million to $495 million for 2026. 2026-03-03: Howmet issued $1.2 billion of notes to fund the CAM purchase: $400 million of 3.750% notes due 2028, $300 million of 3.900% notes due 2029 and $500 million of 4.750% notes due 2036. On February 6, 2026, it also bought Brunner Manufacturing, a fastener maker, for about $120 million. 2026-02-12: Howmet reported 2025 results. Revenue rose 11% to $8.3 billion, EPS was $3.71 and adjusted EPS was $3.77. Free cash flow was $1.43 billion after capital expenditures of $453 million. The company first guided 2026 revenue of $9.0 billion to $9.2 billion and adjusted EPS of $4.35 to $4.55.