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Howmet vs. Textron: Which Aerospace & Defense Stock has Better Prospects?
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Key Takeaways
HWM saw 9% growth in commercial and 19% rise in defense aerospace revenues in Q1 2025.
HWM boosted its dividend by 25% and has $2B remaining in share repurchase authorization.
TXT posted $7.87B in aviation backlog but faces cost pressures and ongoing supply-chain delays.
Howmet Aerospace Inc. (HWM - Free Report) and Textron Inc. (TXT - Free Report) are two prominent names operating in the aerospace and defense industry. As rivals, both companies are engaged in producing highly engineered aircraft components for commercial and military aircraft in the United States and internationally. Both companies have been enjoying significant growth opportunities in the aerospace and defense space on account of the improving air traffic trend and the expansionary U.S. budgetary policy in the past couple of years. Let’s take a closer look at their fundamentals, growth prospects and challenges.
The Case for Howmet Aerospace
Howmet is witnessing strong momentum in its commercial aerospace market. The strength in air travel continues, with wide-body aircraft demand also picking up, supporting continued OEM spending. Pickup in air travel is generally positive for the company as the increased usage of aircraft spurs spending on parts and products that it provides and also encourages airlines to buy more aircraft, which again drives its sales.
Revenues from the commercial aerospace market increased 9% year over year in the first quarter of 2025, constituting 52% of its business. The sustained strength was attributed to new, more fuel-efficient aircraft with reduced carbon emissions and increased spare demand for engines. Boeing is also anticipated to witness a gradual production recovery, particularly in the 737 MAX aircraft, with an end to its workers’ strike, which is likely to boost demand for Howmet’s products in the market.
The defense aerospace market has also been witnessing positive momentum, cushioned by steady government support. Robust orders for engine spares for the F-35 program as well as spares and new builds for legacy fighters are proving beneficial for the company. In the first quarter, revenues from the defense aerospace market increased 19% year over year, constituting 17% of the company’s revenues.
Howmet’s measures to reward shareholders are encouraging. In first-quarter 2025, the company paid dividends of $42 million and repurchased shares worth $125 million. In January 2025, the company hiked its dividend by 25% to 10 cents per share. Also, in July 2024, its board approved an increase in the share repurchase program by $2 billion to $2.487 billion of its common stock. As of April end, Howmet’s total share repurchase authorization available was $2 billion.
The Case for Textron
Improving commercial air passenger traffic has been benefiting Textron’s Aviation business unit. Strong fleet utilization, backed by improving commercial air travel, contributed to Textron Aviation unit’s aftermarket revenue growth of 6% on a year-over-year basis in the first quarter of 2025. Thanks to growing air travel, Textron has also been witnessing strong order activity, which resulted in a backlog of $7.87 billion for its Aviation segment.
Apart from its strong presence in the commercial aerospace market, TXT enjoys solid demand for its defense products as well. To this end, it is imperative to mention that in the first quarter, Textron’s Systems segment received a contract valued at up to $100 million from the U.S. Navy for support software development updates for its unmanned mine sweeping operations. It also delivered 13 Ship-to-Shore Connector jets to the U.S. Navy during the quarter.
The company’s cash and cash equivalents amounted to $1.25 billion at the end of the first quarter. While Textron’s long-term debt totaled $3.38 billion as of March 29, 2025, its current debt was $0.36 billion. Although the long-term debt value is higher than its cash reserve, its current debt remains much lower than the cash balance. So, we may safely conclude that the company boasts a solid solvency position, at least in the short term.
Despite the positives, persistent supply-chain challenges arising out of component shortages and delays have and may continue to result in production delays for certain of Textron’s products. Also, TXT may continue to experience cost increases for certain materials and components, which, along with increased energy and shipping costs and other inflationary pressures, may continue to adversely impact its profitability.
Price Performance
In the past six months, Howmet shares have risen 60.4%, while Textron stock has gained 4.8%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HWM & TXT
The Zacks Consensus Estimate for HWM’s 2025 sales and earnings per share (EPS) implies year-over-year growth of 8.5% and 28.6%, respectively. HWM’s EPS estimates for both 2025 and 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TXT’s 2025 sales and EPS implies year-over-year growth of 6.6% and 11.1%, respectively. TXT’s EPS estimates have been trending northward over the past 60 days for both 2025 and 2026.
Image Source: Zacks Investment Research
TXT’s Valuation Attractive Than Howmet
TXT is trading at a forward 12-month price-to-earnings ratio of 12.56X, below its median of 13.44X over the last three years. Howmet’s forward earnings multiple sits at 46.91X, much higher than its median of 25.8X over the same time frame.
Image Source: Zacks Investment Research
Conclusion
Textron’s strength in the commercial aerospace market has been dented by the continued supply-chain challenges arising from component shortages. The company’s solid liquidity position for the short run is an added strength.
In contrast, Howmet’s market leadership position and strength in both commercial and defense aerospace markets provide it with a competitive advantage to leverage the long-term demand prospects in the aerospace market. Despite its steeper valuation, HWM seems to be a better pick due to strong estimates, stock price appreciation and better prospects for sales and profit growth.
Given these factors, HWM seems a better pick for investors than TXT currently. While HWM sports a Zacks Rank #1 (Strong Buy), TXT currently carries a Zacks Rank #3 (Hold).
Image: Shutterstock
Howmet vs. Textron: Which Aerospace & Defense Stock has Better Prospects?
Key Takeaways
Howmet Aerospace Inc. (HWM - Free Report) and Textron Inc. (TXT - Free Report) are two prominent names operating in the aerospace and defense industry. As rivals, both companies are engaged in producing highly engineered aircraft components for commercial and military aircraft in the United States and internationally. Both companies have been enjoying significant growth opportunities in the aerospace and defense space on account of the improving air traffic trend and the expansionary U.S. budgetary policy in the past couple of years. Let’s take a closer look at their fundamentals, growth prospects and challenges.
The Case for Howmet Aerospace
Howmet is witnessing strong momentum in its commercial aerospace market. The strength in air travel continues, with wide-body aircraft demand also picking up, supporting continued OEM spending. Pickup in air travel is generally positive for the company as the increased usage of aircraft spurs spending on parts and products that it provides and also encourages airlines to buy more aircraft, which again drives its sales.
Revenues from the commercial aerospace market increased 9% year over year in the first quarter of 2025, constituting 52% of its business. The sustained strength was attributed to new, more fuel-efficient aircraft with reduced carbon emissions and increased spare demand for engines. Boeing is also anticipated to witness a gradual production recovery, particularly in the 737 MAX aircraft, with an end to its workers’ strike, which is likely to boost demand for Howmet’s products in the market.
The defense aerospace market has also been witnessing positive momentum, cushioned by steady government support. Robust orders for engine spares for the F-35 program as well as spares and new builds for legacy fighters are proving beneficial for the company. In the first quarter, revenues from the defense aerospace market increased 19% year over year, constituting 17% of the company’s revenues.
Howmet’s measures to reward shareholders are encouraging. In first-quarter 2025, the company paid dividends of $42 million and repurchased shares worth $125 million. In January 2025, the company hiked its dividend by 25% to 10 cents per share. Also, in July 2024, its board approved an increase in the share repurchase program by $2 billion to $2.487 billion of its common stock. As of April end, Howmet’s total share repurchase authorization available was $2 billion.
The Case for Textron
Improving commercial air passenger traffic has been benefiting Textron’s Aviation business unit. Strong fleet utilization, backed by improving commercial air travel, contributed to Textron Aviation unit’s aftermarket revenue growth of 6% on a year-over-year basis in the first quarter of 2025. Thanks to growing air travel, Textron has also been witnessing strong order activity, which resulted in a backlog of $7.87 billion for its Aviation segment.
Apart from its strong presence in the commercial aerospace market, TXT enjoys solid demand for its defense products as well. To this end, it is imperative to mention that in the first quarter, Textron’s Systems segment received a contract valued at up to $100 million from the U.S. Navy for support software development updates for its unmanned mine sweeping operations. It also delivered 13 Ship-to-Shore Connector jets to the U.S. Navy during the quarter.
The company’s cash and cash equivalents amounted to $1.25 billion at the end of the first quarter. While Textron’s long-term debt totaled $3.38 billion as of March 29, 2025, its current debt was $0.36 billion. Although the long-term debt value is higher than its cash reserve, its current debt remains much lower than the cash balance. So, we may safely conclude that the company boasts a solid solvency position, at least in the short term.
Despite the positives, persistent supply-chain challenges arising out of component shortages and delays have and may continue to result in production delays for certain of Textron’s products. Also, TXT may continue to experience cost increases for certain materials and components, which, along with increased energy and shipping costs and other inflationary pressures, may continue to adversely impact its profitability.
Price Performance
In the past six months, Howmet shares have risen 60.4%, while Textron stock has gained 4.8%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HWM & TXT
The Zacks Consensus Estimate for HWM’s 2025 sales and earnings per share (EPS) implies year-over-year growth of 8.5% and 28.6%, respectively. HWM’s EPS estimates for both 2025 and 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TXT’s 2025 sales and EPS implies year-over-year growth of 6.6% and 11.1%, respectively. TXT’s EPS estimates have been trending northward over the past 60 days for both 2025 and 2026.
Image Source: Zacks Investment Research
TXT’s Valuation Attractive Than Howmet
TXT is trading at a forward 12-month price-to-earnings ratio of 12.56X, below its median of 13.44X over the last three years. Howmet’s forward earnings multiple sits at 46.91X, much higher than its median of 25.8X over the same time frame.
Image Source: Zacks Investment Research
Conclusion
Textron’s strength in the commercial aerospace market has been dented by the continued supply-chain challenges arising from component shortages. The company’s solid liquidity position for the short run is an added strength.
In contrast, Howmet’s market leadership position and strength in both commercial and defense aerospace markets provide it with a competitive advantage to leverage the long-term demand prospects in the aerospace market. Despite its steeper valuation, HWM seems to be a better pick due to strong estimates, stock price appreciation and better prospects for sales and profit growth.
Given these factors, HWM seems a better pick for investors than TXT currently. While HWM sports a Zacks Rank #1 (Strong Buy), TXT currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank stocks here.