We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Howmet's Margins Expand Despite Rising Costs: Will the Momentum Sustain?
Read MoreHide Full Article
Key Takeaways
Howmet saw Q3 2025 cost of sales rise 8.9% year over year from higher input costs and headcount.
HWM posted a 29.4% adjusted EBITDA margin in Q3, a 290-basis-point increase despite rising costs.
Howmet raised its 2025 adjusted EBITDA margin outlook to 29% on pricing strength and productivity gains.
Howmet Aerospace Inc. (HWM - Free Report) is grappling with rising costs and expenses over time. HWM reported an uptick in costs and expenses during the third quarter of 2025. The company’s cost of sales increased 8.9% year over year in the quarter due to rising input costs and net headcount. While the metric remained flat in first-quarter 2025, it increased 6.1% year over year in the second quarter.
Despite the rising costs, HWM has consistently delivered margin expansion in recent quarters, reflecting its commitment to sustaining long-term profitability. The company reported an adjusted EBITDA margin of 28.8% in the first quarter of 2025 and 28.7% in the second quarter. In the third quarter, the company reported an adjusted EBITDA margin of 29.4%, marking a 290-basis point improvement year over year.
Also, in the same quarter, the Engine Products, Fastening Systems and Engineered Structures segments posted adjusted EBITDA margin improvements of 80, 480 and 510 basis points, respectively. Strong pricing strategies, disciplined cost control and enhanced operational efficiency have helped Howmet sustain its margin performance.
Strong momentum in both the commercial and defense aerospace markets is further supporting Howmet’s performance. Driven by strength across its businesses, HWM has raised its 2025 guidance for adjusted EBITDA margin. The company now expects adjusted EBITDA margin to be 29% in 2025 compared with 28.5-28.6% projected earlier. Strong pricing and productivity gains are the main factors driving Howmet’s margin improvement.
Margin Performance of HWM’s Peers
Among its major peers, GE Aerospace’s (GE - Free Report) cost of sales surged 24.7% year over year in the third quarter of 2025. However, GE Aerospace’s adjusted operating profit increased 26.5% year over year. GE Aerospace’s adjusted operating margin was 20.3%, relatively stable year over year.
RTX Corp. ’s (RTX - Free Report) total costs and expenses increased 10% year over year to $20 billion in the third quarter of 2025. RTX Corp. generated an adjusted operating profit of $2.97 billion in the third quarter. RTX Corp. reported adjusted operating profit of $2.48 billion in the prior-year quarter.
HWM's Price Performance, Valuation and Estimates
Shares of Howmet have surged 79% in the past year compared with the industry’s growth of 35.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 50.36X, above the industry’s average of 33.02X. Howmet carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HWM’s 2025 earnings has remained steady over the past 60 days.
Image: Bigstock
Howmet's Margins Expand Despite Rising Costs: Will the Momentum Sustain?
Key Takeaways
Howmet Aerospace Inc. (HWM - Free Report) is grappling with rising costs and expenses over time. HWM reported an uptick in costs and expenses during the third quarter of 2025. The company’s cost of sales increased 8.9% year over year in the quarter due to rising input costs and net headcount. While the metric remained flat in first-quarter 2025, it increased 6.1% year over year in the second quarter.
Despite the rising costs, HWM has consistently delivered margin expansion in recent quarters, reflecting its commitment to sustaining long-term profitability. The company reported an adjusted EBITDA margin of 28.8% in the first quarter of 2025 and 28.7% in the second quarter. In the third quarter, the company reported an adjusted EBITDA margin of 29.4%, marking a 290-basis point improvement year over year.
Also, in the same quarter, the Engine Products, Fastening Systems and Engineered Structures segments posted adjusted EBITDA margin improvements of 80, 480 and 510 basis points, respectively. Strong pricing strategies, disciplined cost control and enhanced operational efficiency have helped Howmet sustain its margin performance.
Strong momentum in both the commercial and defense aerospace markets is further supporting Howmet’s performance. Driven by strength across its businesses, HWM has raised its 2025 guidance for adjusted EBITDA margin. The company now expects adjusted EBITDA margin to be 29% in 2025 compared with 28.5-28.6% projected earlier. Strong pricing and productivity gains are the main factors driving Howmet’s margin improvement.
Margin Performance of HWM’s Peers
Among its major peers, GE Aerospace’s (GE - Free Report) cost of sales surged 24.7% year over year in the third quarter of 2025. However, GE Aerospace’s adjusted operating profit increased 26.5% year over year. GE Aerospace’s adjusted operating margin was 20.3%, relatively stable year over year.
RTX Corp. ’s (RTX - Free Report) total costs and expenses increased 10% year over year to $20 billion in the third quarter of 2025. RTX Corp. generated an adjusted operating profit of $2.97 billion in the third quarter. RTX Corp. reported adjusted operating profit of $2.48 billion in the prior-year quarter.
HWM's Price Performance, Valuation and Estimates
Shares of Howmet have surged 79% in the past year compared with the industry’s growth of 35.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 50.36X, above the industry’s average of 33.02X. Howmet carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HWM’s 2025 earnings has remained steady over the past 60 days.
Image Source: Zacks Investment Research
Howmet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.