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Howmet Aerospace Inc. (HWM) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Howmet (HWM - Free Report) ? Shares have been on the move with the stock up 11.6% over the past month. The stock hit a new 52-week high of $103 in the previous session. Howmet has gained 88.5% since the start of the year compared to the 22.7% move for the Zacks Construction sector and the 41.3% return for the Zacks Engineering - R and D Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 30, 2024, Howmet reported EPS of $0.67 versus consensus estimate of $0.6 while it beat the consensus revenue estimate by 2.3%.
For the current fiscal year, Howmet is expected to post earnings of $2.59 per share on $7.48 billion in revenues. This represents a 40.76% change in EPS on a 12.58% change in revenues. For the next fiscal year, the company is expected to earn $3.16 per share on $8.26 billion in revenues. This represents a year-over-year change of 21.74% and 10.46%, respectively.
Valuation Metrics
Howmet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Howmet has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 39.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 21X. On a trailing cash flow basis, the stock currently trades at 40.5X versus its peer group's average of 17.2X. Additionally, the stock has a PEG ratio of 1.52. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Howmet currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Howmet fits the bill. Thus, it seems as though Howmet shares could have potential in the weeks and months to come.
How Does HWM Stack Up to the Competition?
Shares of HWM have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is KBR, Inc. (KBR - Free Report) . KBR has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. KBR, Inc. beat our consensus estimate by 5.06%, and for the current fiscal year, KBR is expected to post earnings of $3.25 per share on revenue of $7.61 billion.
Shares of KBR, Inc. have gained 10% over the past month, and currently trade at a forward P/E of 21.01X and a P/CF of 18.36X.
The Engineering - R and D Services industry is in the top 16% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HWM and KBR, even beyond their own solid fundamental situation.
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Howmet Aerospace Inc. (HWM) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Howmet (HWM - Free Report) ? Shares have been on the move with the stock up 11.6% over the past month. The stock hit a new 52-week high of $103 in the previous session. Howmet has gained 88.5% since the start of the year compared to the 22.7% move for the Zacks Construction sector and the 41.3% return for the Zacks Engineering - R and D Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 30, 2024, Howmet reported EPS of $0.67 versus consensus estimate of $0.6 while it beat the consensus revenue estimate by 2.3%.
For the current fiscal year, Howmet is expected to post earnings of $2.59 per share on $7.48 billion in revenues. This represents a 40.76% change in EPS on a 12.58% change in revenues. For the next fiscal year, the company is expected to earn $3.16 per share on $8.26 billion in revenues. This represents a year-over-year change of 21.74% and 10.46%, respectively.
Valuation Metrics
Howmet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Howmet has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 39.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 21X. On a trailing cash flow basis, the stock currently trades at 40.5X versus its peer group's average of 17.2X. Additionally, the stock has a PEG ratio of 1.52. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Howmet currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Howmet fits the bill. Thus, it seems as though Howmet shares could have potential in the weeks and months to come.
How Does HWM Stack Up to the Competition?
Shares of HWM have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is KBR, Inc. (KBR - Free Report) . KBR has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. KBR, Inc. beat our consensus estimate by 5.06%, and for the current fiscal year, KBR is expected to post earnings of $3.25 per share on revenue of $7.61 billion.
Shares of KBR, Inc. have gained 10% over the past month, and currently trade at a forward P/E of 21.01X and a P/CF of 18.36X.
The Engineering - R and D Services industry is in the top 16% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HWM and KBR, even beyond their own solid fundamental situation.