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Key Reasons to Retain the Howmet (HWM) Stock in Your Portfolio
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Howmet Aerospace Inc. (HWM - Free Report) is benefiting from continued improvement in commercial aerospace end market, owing to recovery in narrow-body. Revenues from commercial aerospace jumped 34% year over year in the second quarter.
Strength in the commercial aerospace market is driving revenues at the Engine Products (up 20% year over year in the second quarter), Fastening Systems (up 6% year over year) and Engineered Structures (up 16% year over year) segments. Higher aluminum prices and volumes are supporting growth of the Forged Wheels (up 22% year over year) segment.
Cost-control measures, efficiency gains and pricing actions are supporting Howmet’s margin performance. Despite inflationary pressure from high raw material costs, adjusted EBITDA margin improved to 27.5% in the second quarter from 23.9% in the year-ago quarter.
For the third quarter, Howmet anticipates revenues of $1.425-$1.455 billion, with a mid-point of $1.44 billion. The mid-point of the guided range is higher than $1.283 billion reported in the year-ago quarter.
Howmet’s measures to reward its shareholders are encouraging. The company paid out dividends of $18 million in the first six months compared with $1 million in the year-ago period. Also, it repurchased shares worth $235 million in the first six months compared with a $200 million buyback made a year ago.
Due to the abovementioned tailwinds, shares of this Zacks Rank #3 (Hold) company have gained 3.5% in the year-to-date period, outperforming the industry’s 5.7% decline.
Image Source: Zacks Investment Research
On the flip side, supply-chain disruptions are affecting HWM’s volumes and limiting commercial truck production in the commercial transportation end market. Additionally, continued Boeing 787 production declines are affecting performance of the Fastening System and Engineered Structures segments.
Nevertheless, Howmet’s expectation of continued recovery in commercial aerospace, backed by an improvement in narrow body production rates, places the company well for future growth. Strength in industrial gas turbine and oil and gas end markets is likely to aid its performance in 2022.
For 2022, the company anticipates revenues of $5.645-$5.715 billion, with the mid-point pegged at $5.680 billion. The mid-point is higher than $4.972 billion reported in 2021. The Zacks Consensus Estimate for the company’s 2022 earnings has been revised upward by a penny in the past 90 days.
Image: Bigstock
Key Reasons to Retain the Howmet (HWM) Stock in Your Portfolio
Howmet Aerospace Inc. (HWM - Free Report) is benefiting from continued improvement in commercial aerospace end market, owing to recovery in narrow-body. Revenues from commercial aerospace jumped 34% year over year in the second quarter.
Strength in the commercial aerospace market is driving revenues at the Engine Products (up 20% year over year in the second quarter), Fastening Systems (up 6% year over year) and Engineered Structures (up 16% year over year) segments. Higher aluminum prices and volumes are supporting growth of the Forged Wheels (up 22% year over year) segment.
Cost-control measures, efficiency gains and pricing actions are supporting Howmet’s margin performance. Despite inflationary pressure from high raw material costs, adjusted EBITDA margin improved to 27.5% in the second quarter from 23.9% in the year-ago quarter.
For the third quarter, Howmet anticipates revenues of $1.425-$1.455 billion, with a mid-point of $1.44 billion. The mid-point of the guided range is higher than $1.283 billion reported in the year-ago quarter.
Howmet’s measures to reward its shareholders are encouraging. The company paid out dividends of $18 million in the first six months compared with $1 million in the year-ago period. Also, it repurchased shares worth $235 million in the first six months compared with a $200 million buyback made a year ago.
Due to the abovementioned tailwinds, shares of this Zacks Rank #3 (Hold) company have gained 3.5% in the year-to-date period, outperforming the industry’s 5.7% decline.
Image Source: Zacks Investment Research
On the flip side, supply-chain disruptions are affecting HWM’s volumes and limiting commercial truck production in the commercial transportation end market. Additionally, continued Boeing 787 production declines are affecting performance of the Fastening System and Engineered Structures segments.
Nevertheless, Howmet’s expectation of continued recovery in commercial aerospace, backed by an improvement in narrow body production rates, places the company well for future growth. Strength in industrial gas turbine and oil and gas end markets is likely to aid its performance in 2022.
For 2022, the company anticipates revenues of $5.645-$5.715 billion, with the mid-point pegged at $5.680 billion. The mid-point is higher than $4.972 billion reported in 2021. The Zacks Consensus Estimate for the company’s 2022 earnings has been revised upward by a penny in the past 90 days.
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