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Howmet's Transportation Market Shrinks: What's the Path Forward?
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Key Takeaways
HWM's commercial transportation market's revenues fell 14% in Q1 2025 due to weaker OEM builds.
Production issues with Boeing 787 and supply-chain delays are pressuring aerospace deliveries.
Strong F-35 engine spares and aerospace demand continue to support HWM's overall performance.
Howmet Aerospace Inc. (HWM - Free Report) is facing continued softness in its commercial transportation market. In first-quarter of 2025, revenues from the commercial transportation market fell 14% on a year-over-year basis. The drop was primarily due to softer OEM builds, particularly in the Forged Wheels segment. Management expects this weakness to persist through the second half of the year. Also, lower commercial truck builds, due to tariff-related and economic uncertainty in North America, have been weighing on the company’s near-term performance.
Production issues, particularly involving Boeing’s 787 aircraft, have emerged due to quality control challenges. These disruptions are expected to adversely affect both narrow-body and wide-body aircraft production rates in the coming quarters, which, in turn, may reduce demand for the maintenance parts and products that the company produces. Also, as a global player, Howmet remains exposed to supply-chain volatility, which has already caused delays and increased costs over recent years. These ongoing supply-chain challenges in the aerospace sector are expected to continue impacting the company’s ability to deliver finished products to customers within the stipulated time.
Despite challenging conditions in the commercial transportation market, strong momentum in the commercial and defense aerospace markets continues to support Howmet’s performance. Robust orders for engine spares for the F-35 program, aerospace fastening systems and airframe structural components also augur well for the company.
Segment Snapshot of HWM’s Peers
Among its major peers, Textron Inc.’s (TXT - Free Report) Aviation segment is gaining momentum, backed by improving commercial air passenger traffic. In the first quarter of 2025, Textron’s Aviation segment’s revenues increased 2% year over year to $1.21 billion. Textron’s segment’s order backlog at the end of the quarter totaled $7.9 billion.
Another peer, GE Aerospace (GE - Free Report) is benefiting from solid demand for LEAP, GEnx & GE9X engines and services within the Commercial Engines & Services business. GE Aerospace’s growth is also supported by increasing air traffic, fleet renewal and expansion activities. During the second quarter of 2025, GE Aerospace inked a deal with Qatar Airways to supply more than 400 GE9X and GEnx engines. It represents the largest widebody engine deal in the company’s history.
HWM's Price Performance, Valuation and Estimates
Shares of Howmet have surged 130.4% in the past year compared with the industry’s growth of 17.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 47.53X, above the industry’s average of 27.95X. Howmet carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HWM’s earnings has been on the rise over the past 60 days.
Image: Bigstock
Howmet's Transportation Market Shrinks: What's the Path Forward?
Key Takeaways
Howmet Aerospace Inc. (HWM - Free Report) is facing continued softness in its commercial transportation market. In first-quarter of 2025, revenues from the commercial transportation market fell 14% on a year-over-year basis. The drop was primarily due to softer OEM builds, particularly in the Forged Wheels segment. Management expects this weakness to persist through the second half of the year. Also, lower commercial truck builds, due to tariff-related and economic uncertainty in North America, have been weighing on the company’s near-term performance.
Production issues, particularly involving Boeing’s 787 aircraft, have emerged due to quality control challenges. These disruptions are expected to adversely affect both narrow-body and wide-body aircraft production rates in the coming quarters, which, in turn, may reduce demand for the maintenance parts and products that the company produces. Also, as a global player, Howmet remains exposed to supply-chain volatility, which has already caused delays and increased costs over recent years. These ongoing supply-chain challenges in the aerospace sector are expected to continue impacting the company’s ability to deliver finished products to customers within the stipulated time.
Despite challenging conditions in the commercial transportation market, strong momentum in the commercial and defense aerospace markets continues to support Howmet’s performance. Robust orders for engine spares for the F-35 program, aerospace fastening systems and airframe structural components also augur well for the company.
Segment Snapshot of HWM’s Peers
Among its major peers, Textron Inc.’s (TXT - Free Report) Aviation segment is gaining momentum, backed by improving commercial air passenger traffic. In the first quarter of 2025, Textron’s Aviation segment’s revenues increased 2% year over year to $1.21 billion. Textron’s segment’s order backlog at the end of the quarter totaled $7.9 billion.
Another peer, GE Aerospace (GE - Free Report) is benefiting from solid demand for LEAP, GEnx & GE9X engines and services within the Commercial Engines & Services business. GE Aerospace’s growth is also supported by increasing air traffic, fleet renewal and expansion activities. During the second quarter of 2025, GE Aerospace inked a deal with Qatar Airways to supply more than 400 GE9X and GEnx engines. It represents the largest widebody engine deal in the company’s history.
HWM's Price Performance, Valuation and Estimates
Shares of Howmet have surged 130.4% in the past year compared with the industry’s growth of 17.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 47.53X, above the industry’s average of 27.95X. Howmet carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HWM’s earnings has been on the rise over the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.