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HWM vs. ATI: Which Aerospace & Defense Stock Has More Upside Potential?
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Key Takeaways
HWM's commercial aerospace revenues jumped 28%, while defense aerospace revenues grew 11% in Q2 2026.
ATI's aerospace and defense sales rose 13%, with a record $4.4 billion backlog and defense revenues up 36%.
HWM raised 2026 revenue guidance to $10.00-$10.10 billion, while ATI's adjusted EBITDA surged 37%.
Rising geopolitical tensions worldwide are driving demand for defense equipment and technologies, creating significant growth opportunities for companies like Howmet Aerospace Inc. (HWM - Free Report) and ATI Inc. (ATI - Free Report) . These are two familiar names operating in the aerospace and defense space.
Howmet Aerospace manufactures components and systems for jet engines and airframes, while ATI provides integrated aerospace and defense technologies, including avionics, electronic systems, and command-and-control solutions, to customers in the United States and abroad.
Rising global defense spending and a recovery in commercial aviation have increased investor interest in aerospace companies with defense exposure. But which of these two stocks is better positioned to benefit from these trends? Let’s compare their fundamentals to find out.
The Case for Howmet Aerospace
Howmet Aerospace is benefiting from an increase in commercial aerospace demand. Strong narrow- and wide-body aircraft activity is driving higher OEM spending, while increased air travel is boosting aircraft utilization and demand for the company’s parts and products.
Revenues from the commercial aerospace market rose 28% year over year in the second quarter of 2026. It accounted for 53% of HWM’s total business, driven by strong demand for engine spares. Solid A320 and A350 build rates at Airbus and the recovery in Boeing 737 MAX production are expected to support demand for the company’s engine spares.
Though commercial aerospace remains the company’s primary growth driver, its defense business is also gaining momentum, supported by steady government spending and sustained demand for defense technologies. HWM has been experiencing robust orders for engine spares for the F-35 program and other legacy fighters. Revenues from the defense aerospace market increased 11% year over year in the second quarter, constituting 15% of the company’s total business.
Howmet Aerospace expects demand across the commercial aerospace, defense aerospace and gas turbine markets to increase in 2026, supported by higher engine spares demand. The company raised its 2026 revenue guidance to $10.00-$10.10 billion. Adjusted EBITDA is now projected at $3.21-$3.25 billion, while adjusted earnings are expected to range from $5.23 to $5.31 per share.
Howmet Aerospace’s shareholder-friendly initiatives are also encouraging. The company distributed $97 million in dividends during the first half of the year. In July 2026, it raised its quarterly dividend by 17% to 14 cents per share, equivalent to 56 cents annually. Additionally, through July, the company had repurchased $800 million worth of shares year to date.
Exiting the second quarter, HWM’s cash equivalents were $563 million, higher than its short-term borrowings of $450 million. In the first half of the year, Howmet Aerospace generated cash of $1.04 billion from operating activities (up 48% year over year), while its free cash flow totaled $838 million (up 75% year over year).
The Case for ATI
ATI is gaining from strong aerospace and defense demand, supporting solid multi-year growth prospects. Aerospace continues to be a key growth driver for ATI, as rising aircraft production and increased output of next-generation jet engines boost demand for its proprietary nickel-based superalloys, titanium products, forgings and other specialty materials. The growing use of next-generation engines offers an additional opportunity, as these platforms require more advanced alloys per engine. Expanding defense opportunities and long-term customer agreements are also strengthening revenue visibility.
In the second quarter of 2026, ATI’s aerospace and defense sales grew 13% year over year, while its backlog reached a record $4.4 billion, up 18%. Jet-engine revenues increased 13%, with management projecting high-teens growth for the full year. Defense revenues surged 36% to a record high, supported by a renewed naval nuclear agreement through 2030 that is expected to more than double annual revenues compared with the previous contract. ATI also anticipates mid- to high-single-digit airframe growth in 2026. With content on next-generation engines more than double that of legacy platforms, ATI is well positioned to benefit from the increasing adoption of newer aircraft platforms.
ATI's operational transformation is strengthening profitability. Second-quarter adjusted EBITDA jumped 37% year over year to $284.4 million, while margin expanded 440 basis points to 22.6%. The elevATIon program has increased throughput, while targeted titanium and nickel investments are expected to raise nickel capacity by 15-20% by early 2028 and support approximately $350 million of incremental annual nickel-based revenues. These initiatives, combined with a loyal customer base, position ATI for sustained earnings growth.
ATI is focused on enhancing shareholder value by strengthening cash flow generation and improving its consistency. In the first half of 2026, adjusted free cash flow reached $143.2 million against an outflow of $50.2 million in the year-ago period. The company is also working to reduce cash flow seasonality and improve predictability. Higher adjusted EBITDA and stronger operating performance are supporting cash generation, while healthy demand across aerospace and defense is expected to provide further support.
The Zacks Consensus Estimate for HWM & ATI
The Zacks Consensus Estimate for HWM’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 22.6% and 41.6%, respectively. HWM’s EPS estimates for 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
The consensus estimate for AIT’s 2026 sales and EPS indicates year-over-year growth of 12.9% and 58.3%, respectively. ATI’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 declined 2.6%, while ATI stock has soared 81.3%.
Image Source: Zacks Investment Research
HWM is trading at a forward 12-month price-to-earnings ratio of 31.08X, above its median of 29.63X over the last five years. ATI’s forward earnings multiple sits at 26.42X, above its median of 20.72X over the same time frame.
Image Source: Zacks Investment Research
Final Take
Howmet Aerospace is benefiting from strong commercial aerospace demand, rising engine spares sales and improving defense aerospace activity, supported by higher aircraft production and increased aircraft utilization. The company expects continued growth across its commercial aerospace, defense aerospace and gas turbine markets, aided by higher engine spares demand. Strong cash flow generation, a solid liquidity position and increased shareholder returns further support its prospects. However, its relatively high valuation remains a concern.
In contrast, ATI is benefiting from robust aerospace and defense demand, a record backlog and increasing content on next-generation jet engines. The company’s operational transformation, capacity expansion initiatives and long-term customer agreements are supporting margin expansion and improving revenue visibility. ATI also expects healthy growth across jet-engine, defense and airframe markets, while improving free cash flow generation supports its financial performance. However, its elevated valuation following the stock’s sharp rally remains a key consideration.
ATI’s lower forward valuation makes it relatively more attractive than Howmet Aerospace based on this metric, though both stocks trade above their respective five-year median valuations. ATI also outperformed HWM over the past year, reflecting stronger investor confidence. Both companies currently sport a Zacks Rank #1 (Strong Buy).
View the Zacks #1 Rank List
Image: Bigstock
HWM vs. ATI: Which Aerospace & Defense Stock Has More Upside Potential?
Key Takeaways
Rising geopolitical tensions worldwide are driving demand for defense equipment and technologies, creating significant growth opportunities for companies like Howmet Aerospace Inc. (HWM - Free Report) and ATI Inc. (ATI - Free Report) . These are two familiar names operating in the aerospace and defense space.
Howmet Aerospace manufactures components and systems for jet engines and airframes, while ATI provides integrated aerospace and defense technologies, including avionics, electronic systems, and command-and-control solutions, to customers in the United States and abroad.
Rising global defense spending and a recovery in commercial aviation have increased investor interest in aerospace companies with defense exposure. But which of these two stocks is better positioned to benefit from these trends? Let’s compare their fundamentals to find out.
The Case for Howmet Aerospace
Howmet Aerospace is benefiting from an increase in commercial aerospace demand. Strong narrow- and wide-body aircraft activity is driving higher OEM spending, while increased air travel is boosting aircraft utilization and demand for the company’s parts and products.
Revenues from the commercial aerospace market rose 28% year over year in the second quarter of 2026. It accounted for 53% of HWM’s total business, driven by strong demand for engine spares. Solid A320 and A350 build rates at Airbus and the recovery in Boeing 737 MAX production are expected to support demand for the company’s engine spares.
Though commercial aerospace remains the company’s primary growth driver, its defense business is also gaining momentum, supported by steady government spending and sustained demand for defense technologies. HWM has been experiencing robust orders for engine spares for the F-35 program and other legacy fighters. Revenues from the defense aerospace market increased 11% year over year in the second quarter, constituting 15% of the company’s total business.
Howmet Aerospace expects demand across the commercial aerospace, defense aerospace and gas turbine markets to increase in 2026, supported by higher engine spares demand. The company raised its 2026 revenue guidance to $10.00-$10.10 billion. Adjusted EBITDA is now projected at $3.21-$3.25 billion, while adjusted earnings are expected to range from $5.23 to $5.31 per share.
Howmet Aerospace’s shareholder-friendly initiatives are also encouraging. The company distributed $97 million in dividends during the first half of the year. In July 2026, it raised its quarterly dividend by 17% to 14 cents per share, equivalent to 56 cents annually. Additionally, through July, the company had repurchased $800 million worth of shares year to date.
Exiting the second quarter, HWM’s cash equivalents were $563 million, higher than its short-term borrowings of $450 million. In the first half of the year, Howmet Aerospace generated cash of $1.04 billion from operating activities (up 48% year over year), while its free cash flow totaled $838 million (up 75% year over year).
The Case for ATI
ATI is gaining from strong aerospace and defense demand, supporting solid multi-year growth prospects. Aerospace continues to be a key growth driver for ATI, as rising aircraft production and increased output of next-generation jet engines boost demand for its proprietary nickel-based superalloys, titanium products, forgings and other specialty materials. The growing use of next-generation engines offers an additional opportunity, as these platforms require more advanced alloys per engine. Expanding defense opportunities and long-term customer agreements are also strengthening revenue visibility.
In the second quarter of 2026, ATI’s aerospace and defense sales grew 13% year over year, while its backlog reached a record $4.4 billion, up 18%. Jet-engine revenues increased 13%, with management projecting high-teens growth for the full year. Defense revenues surged 36% to a record high, supported by a renewed naval nuclear agreement through 2030 that is expected to more than double annual revenues compared with the previous contract. ATI also anticipates mid- to high-single-digit airframe growth in 2026. With content on next-generation engines more than double that of legacy platforms, ATI is well positioned to benefit from the increasing adoption of newer aircraft platforms.
ATI's operational transformation is strengthening profitability. Second-quarter adjusted EBITDA jumped 37% year over year to $284.4 million, while margin expanded 440 basis points to 22.6%. The elevATIon program has increased throughput, while targeted titanium and nickel investments are expected to raise nickel capacity by 15-20% by early 2028 and support approximately $350 million of incremental annual nickel-based revenues. These initiatives, combined with a loyal customer base, position ATI for sustained earnings growth.
ATI is focused on enhancing shareholder value by strengthening cash flow generation and improving its consistency. In the first half of 2026, adjusted free cash flow reached $143.2 million against an outflow of $50.2 million in the year-ago period. The company is also working to reduce cash flow seasonality and improve predictability. Higher adjusted EBITDA and stronger operating performance are supporting cash generation, while healthy demand across aerospace and defense is expected to provide further support.
The Zacks Consensus Estimate for HWM & ATI
The Zacks Consensus Estimate for HWM’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 22.6% and 41.6%, respectively. HWM’s EPS estimates for 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
The consensus estimate for AIT’s 2026 sales and EPS indicates year-over-year growth of 12.9% and 58.3%, respectively. ATI’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 declined 2.6%, while ATI stock has soared 81.3%.
Image Source: Zacks Investment Research
HWM is trading at a forward 12-month price-to-earnings ratio of 31.08X, above its median of 29.63X over the last five years. ATI’s forward earnings multiple sits at 26.42X, above its median of 20.72X over the same time frame.
Image Source: Zacks Investment Research
Final Take
Howmet Aerospace is benefiting from strong commercial aerospace demand, rising engine spares sales and improving defense aerospace activity, supported by higher aircraft production and increased aircraft utilization. The company expects continued growth across its commercial aerospace, defense aerospace and gas turbine markets, aided by higher engine spares demand. Strong cash flow generation, a solid liquidity position and increased shareholder returns further support its prospects. However, its relatively high valuation remains a concern.
In contrast, ATI is benefiting from robust aerospace and defense demand, a record backlog and increasing content on next-generation jet engines. The company’s operational transformation, capacity expansion initiatives and long-term customer agreements are supporting margin expansion and improving revenue visibility. ATI also expects healthy growth across jet-engine, defense and airframe markets, while improving free cash flow generation supports its financial performance. However, its elevated valuation following the stock’s sharp rally remains a key consideration.
ATI’s lower forward valuation makes it relatively more attractive than Howmet Aerospace based on this metric, though both stocks trade above their respective five-year median valuations. ATI also outperformed HWM over the past year, reflecting stronger investor confidence. Both companies currently sport a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.