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Will Increased Military Spending Fuel Howmet's Defense Aerospace Gains?

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Key Takeaways

  • HWM's defense aerospace revenues jumped 19% in Q1 2025, fueled by strong demand for engine spares.
  • Defense sales rose 36% in Engineered Structures, lifting the segment's revenues by 8% year over year.
  • The $852.2B U.S. defense budget for FY25 marks a 3.3% increase, supporting HWM's contract opportunities.

Howmet Aerospace Inc. (HWM - Free Report) is benefiting from the expanding defense budget, which remains a key growth catalyst for it. 

In the first quarter of 2025, revenues from the defense aerospace market rose 19% year over year, which accounted for 17% of HWM’s total sales. This growth was driven by strong demand for engine spares, especially for the F-35 program, as well as new builds and spare parts for legacy fighter jets. As a result, Howmet’s Engineered Structures segment reported impressive results in the quarter. The segment’s revenues rose 8% year over year, supported by a 36% increase in defense aerospace sales. With military aircraft programs expected to benefit from increased funding, HWM is poised to continue benefiting from consistent demand in the quarters ahead.

In August 2024, the U.S. Senate Committee on Appropriations approved the fiscal 2025 Defense Appropriations Act, which allocated $852.2 billion in total funding. This reflects a 3.3% increase over the approved funding during fiscal 2024 (ended September 2024). This rise in military funding bodes well for Howmet’s defense aerospace market.

The recent increase in military funding positions Howmet well to win more contracts. With a strong momentum in the F-35 program and steady government support, its defense aerospace market is expected to flourish. As long as funding remains strong and priority programs stay on track, HWM is likely to see more gains from its defense business.

HWM’s Peers in the Defense Space

Among its major peers, Textron Inc.’s (TXT - Free Report) defense business is gaining momentum, backed by key U.S. military contracts and steady government support. In the first quarter of 2025, Textron’s Systems segment secured a U.S. Navy contract worth up to $100 million and delivered 13 Ship-to-Shore Connector jets. Meanwhile, Textron’s Bell segment is progressing in the FLRAA program, backed by facility expansions to support future production.

Its another peer, GE Aerospace’s (GE - Free Report) Defense & Propulsion Technologies business is benefiting from rising demand for its advanced propulsion systems and military engine programs. In the first quarter of 2025, GE Aerospace secured a U.S. Army IDIQ contract to supply F110 engines. GE Aerospace also successfully tested the T901 engine on a Black Hawk helicopter and completed the design review for the new XA102 engine.

HWM's Price Performance, Valuation and Estimates

Shares of Howmet have surged 114.6% in the past year compared with the industry’s growth of 13.7%.

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From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 45.70X, above the industry’s average of 26.22X. Howmet carries a Value Score of F.

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The Zacks Consensus Estimate for HWM’s earnings has been on the rise over the past 60 days.

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The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


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