Howmet Aerospace Inc. (HWM Quick QuoteHWM - Free Report) and L3Harris Technologies, Inc. (LHX Quick QuoteLHX - Free Report) are both familiar names operating in the aerospace and defense industry. While Howmet is a leading manufacturer of components and systems for jet engines and airframes, L3Harris offers integrated technologies, including avionics, electronic systems, and command and control systems, in the United States and internationally.

Both companies are poised to benefit from significant growth opportunities in the aerospace and defense space on account of the improving air traffic trend and the robust U.S. budgetary policy over the past several years. But which company is better positioned to deliver upside in 2026? Let’s compare their fundamentals, growth prospects and challenges to see which stock stands out now.

The Case for Howmet

The strongest driver of Howmet’s business at the moment is the commercial aerospace market. With growth in air travel, demand for wide-body aircraft has increased, supporting continued OEM spending. Pickup in air travel has been favorable for the company as the increased usage of aircraft spurs spending on parts and products that it provides.

Revenues from the commercial aerospace market increased 15% year over year (exceeding $1.1 billion) in third-quarter 2025, constituting 53% of its business. Also, in the first and second quarters, revenues from the market increased 9% and 8% year over year, respectively.
The sustained strength was attributed to strong demand for engine spares and a record backlog for new, more fuel-efficient aircraft with reduced carbon emissions. Also, healthy build rates at Airbus for A320 and A350 aircraft, along with an expected production recovery in the Boeing 737 MAX aircraft, hold promise for HWM’s spare engine demand.

Howmet has also been witnessing strength in the defense aerospace industry, cushioned by steady government support. Robust orders for engine spares for the F-35 program and spares for legacy fighters like the F-15 and the F-16 are augmenting HWM’s performance. In the third quarter, revenues from the defense aerospace market surged 24% year over year, constituting 17% of the company’s revenues.

HWM’s commitment to rewarding its shareholders through dividend payouts and share buybacks is also encouraging. In the first nine months of 2025, it paid dividends worth $131 million and repurchased shares for $500 million. In August 2025, the company hiked its dividend by 20% to 12 cents per share (annually: 48 cents), marking its second dividend hike in 2025.

The company’s healthy liquidity position also adds to its strength. Exiting the third quarter, Howmet’s cash equivalents were $659 million, much higher than its short-term maturities and other current liabilities of $251 million. In the first nine months of 2025, it generated net cash of $1.23 billion from operating activities, while its free cash flow totaled $901 million.

However, persistent softness in the commercial transportation market is affecting the company’s performance. In the third quarter, revenues from the commercial transportation market declined 3% on a year-over-year basis, following 14% and 4% declines in the first and second quarters, respectively. Lower demand in the commercial transportation markets due to decreased OEM builds is expected to continue in the near term, which will likely affect the performance of its Forged Wheels segment.

The Case for L3Harris

L3Harris is well-positioned to benefit from solid U.S. budget funding provisions. The company claims that its Hypersonic and Ballistic Tracking Space Sensor satellite, known as HBTSS, launched in February 2024, is the only proven on-orbit system capable of tracking the new-range hypersonic missiles. This should provide it with a competitive edge in becoming the primary contractor for the Golden Dome program.

The company completed a $125 million expansion at its space manufacturing facility in Fort Wayne, IN, in April 2025, to support the Department of Defense’s urgent need for on-orbit technology to defend the homeland by building the “Golden Dome.”

While the company boasts a solid position in the U.S. defense space, its international presence also remains significant. Evidently, during the third quarter of 2025, its international revenues accounted for approximately 21.5% of its total revenues.

Notably, L3Harris continues to witness strong demand for its defensive solutions from Asia-Pacific, Latin America and South America, as well as the NATO allies of the United States. Looking ahead, L3Harris’ growth outlook in the international market remains robust, with the NATO members now targeting defense spending increases to 5% of GDP.

Recently, the company received an award worth more than $2.26 billion from South Korea to deliver a fleet of next-generation airborne early warning business jets using the Bombardier Global 6500 airplane. Evidently, during the third quarter, L3Harris and Joby Aviation announced an agreement to explore a new aircraft class for defense applications.

Despite the positives, HWM’s highly leveraged balance sheet remains a major concern. Exiting third-quarter 2025, L3Harris’ cash and cash equivalents amounted to $0.34 billion. On the other hand, its long-term debt of $11 billion remained above the cash balance. Its current debt of $0.73 billion also came in higher than its cash reserve.

Persistent shortage of labor in the aerospace-defense industry continues to pose a threat. Due to such labor shortages, manufacturing companies like L3Harris, which supply critical components to the aerospace and defense industry, might be unable to deliver the finished products within the stipulated timeline, which may impact their performance.

The Zacks Consensus Estimate for HWM & LHX

The Zacks Consensus Estimate for HWM’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 12.2% and 20.3%, respectively. HWM’s EPS estimates for 2026 have increased over the past 60 days.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for LHX’s 2026 sales and EPS indicates year-over-year growth of 6.4% and 17.3%, respectively. LHX’s EPS estimates have been trending northward over the past 60 days for 2026.

Image Source: Zacks Investment Research

Price Performance and Valuation

In the past year, Howmet shares have soared 79.5%, while L3Harris stock has gained 58.8%.

Image Source: Zacks Investment Research

HWM is trading at a forward 12-month price-to-earnings ratio of 50.12X, above its median of 31.79X over the last three years. LHX’s forward earnings multiple sits at 27.55X, above its median of 16.54X over the same time frame.

Image Source: Zacks Investment Research

Final Take on HWM & LHX

Howmet and L3Harris currently have a Zacks Rank #3 (Hold) each, which makes choosing one stock a difficult task. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

L3Harris’ strong foothold in domestic and international markets, along with a solid pipeline of projects, is likely to be beneficial in the long run. The company’s strong momentum in the aerospace and defense markets has been dented by the continued supply-chain challenges and labor shortages. Also, its high debt profile remains a major constraint.

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 holds robust prospects due to strong estimates, stock price appreciation and better prospects for sales and profit growth. Given these factors, HWM seems to be a better pick for investors than LHX currently.