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Strength in Aerospace Market Drives Howmet: Will the Momentum Last?

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Key Takeaways

  • HWM's defense aerospace revenue rose 19% in Q1 2025, making up 17% of its total sales.
  • F-35 engine spares and fighter jet part orders drove a 36% defense boost in Engineered Structures.
  • The $852.2B U.S. defense budget for FY25 supports continued growth in HWM's defense aerospace market.

Howmet Aerospace Inc.’s (HWM - Free Report) defense aerospace market is playing an important role in driving its overall growth. In the first quarter of 2025, the company’s revenues from the defense aerospace market jumped 19% year over year, which accounted for 17% of HWM’s total sales. The surge in revenues was fueled by robust demand for engine spares, particularly related to the F-35 program and an increase in orders for new builds and legacy fighter jet parts.

This uptick significantly benefited Howmet’s Engineered Structures segment, which reported an 8% year-over-year revenue increase in the first quarter, supported by a 36% rise in defense aerospace sales. With military-aircraft programs expected to benefit from increased funding, HWM is poised to maintain strong demand momentum in the quarters ahead.

Adding to the optimism, in August 2024, the U.S. Senate Committee on Appropriations approved the fiscal 2025 Defense Appropriations Act, allocating $852.2 billion in total funding. This marks a 3.3% increase compared to the defense funding approved for fiscal 2024 (ended September 2024). This rise in military funding bodes well for Howmet’s defense aerospace market.

The boost in military funding enhances Howmet’s ability to secure new contracts. Backed by solid momentum in the F-35 program and consistent government support, the company’s defense aerospace market is well-positioned for growth in the coming quarters.

Segment Snapshot of HWM’s Peers

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, its Bell segment is also 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. The company 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 127.7% in the past year compared with the industry’s growth of 20.1%.

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From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 46.77X, above the industry’s average of 27.53X. 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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Image Source: Zacks Investment Research

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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