Key Takeaways

Surging aircraft demand and advanced material adoption position Howmet for sustained revenue and margin expansion through OEM and aftermarket channels.
Strategic supply chain alignment and manufacturing optimization drive higher profitability, cash generation, and reinforced partnerships with aerospace leaders.
Heavy reliance on major aircraft makers, shifting technology trends, regulatory challenges, rising competition, and global trade tensions pose substantial risks to future growth and margins.

Catalysts

About Howmet Aerospace

Provides advanced engineered solutions for the aerospace and transportation industries in the United States, Japan, France, Germany, the United Kingdom, Mexico, Italy, Canada, Poland, China, and internationally.What are the underlying business or industry changes driving this perspective?

The backlog of new commercial aircraft orders is at record highs globally, especially for Airbus, Boeing, and COMAC, fueled by rising demand for air travel in fast-growing middle-class populations and by urbanization trends in major regions. As aircraft underbuild reverses, suppliers like Howmet are poised for multi-year revenue growth as OEM production ramps up to meet this sustained demand.
The growing emphasis on fuel efficiency, emissions reduction, and lighter, high-performance materials across the aviation industry directly benefits Howmet’s portfolio of advanced titanium and nickel superalloy components. Adoption of next-generation engine designs (like new GTF and LEAP platforms) means higher value per shipset for Howmet, expanding both revenues and gross margins as airlines and OEMs prioritize performance.
Large expansions in the installed fleet (both commercial and defense) are accelerating global spares and maintenance cycles, with spares revenue at Howmet now 17% of total sales and projected to rise towards 20%. Higher-margin aftermarket sales flow through to earnings, supporting strong EBITDA and cash generation well ahead of industry averages.
Ongoing flight to supply chain resilience—including diversification and reshoring of critical aerospace manufacturing—positions Howmet as a preferred North American supplier, helping to capture increased domestic content share and tighten strategic alignment with Boeing, Airbus, and defense primes. This drives recurring revenue and predictable cash flows.
Structural margin expansion is underway as Howmet continues to optimize its portfolio, invest in automation and advanced manufacturing, rationalize underperforming operations, and deploy capital into high-return growth opportunities like the industrial gas turbine segment. This underpins the bullish view that EBITDA margins and returns on invested capital will reach new highs in coming years, supporting stronger EPS and free cash flow growth.

Howmet Aerospace Earnings and Revenue Growth

Howmet Aerospace Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more optimistic perspective on Howmet Aerospace compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
The bullish analysts are assuming Howmet Aerospace's revenue will grow by 13.0% annually over the next 3 years.
The bullish analysts assume that profit margins will increase from 15.5% today to 20.6% in 3 years time.
The bullish analysts expect earnings to reach $2.2 billion (and earnings per share of $5.59) by about April 2028, up from $1.2 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 34.3x on those 2028 earnings, down from 48.2x today. This future PE is greater than the current PE for the US Aerospace & Defense industry at 31.7x.
Analysts expect the number of shares outstanding to decline by 0.77% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.3%, as per the Simply Wall St company report.

Howmet Aerospace Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Overdependence on Boeing and Airbus as primary customers exposes Howmet to significant revenue risk if either OEM faces production cutbacks, financial distress, or market share loss, which could have an outsized impact on future earnings and revenue growth.
The accelerating adoption of alternative propulsion technologies such as electric or hydrogen aircraft could shift demand away from legacy components manufactured by Howmet, threatening long-term revenue streams and requiring costly research, development, and retooling that could pressure future margins.
Heightened regulatory scrutiny, evolving safety requirements, and potential certification delays in aviation may disrupt aircraft production schedules and defer Howmet’s revenue recognition, limiting predictability and dampening earnings growth.
Intensifying competition, particularly through advances in additive manufacturing and the risk of commoditization, could erode Howmet’s technical edge, leading to downward pressure on pricing and a negative impact on net margins over time.
Geopolitical fragmentation, rising protectionism, and persistent supply chain instability could limit Howmet’s ability to access non-U.S. growth markets or secure critical materials, potentially stifling long-term revenue expansion and increasing cost volatility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bullish price target for Howmet Aerospace is $159.65, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Howmet Aerospace's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $159.65, and the most bearish reporting a price target of just $112.5.
In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $10.7 billion, earnings will come to $2.2 billion, and it would be trading on a PE ratio of 34.3x, assuming you use a discount rate of 6.3%.
Given the current share price of $137.5, the bullish analyst price target of $159.65 is 13.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Growing Air Travel And Efficiency Trends Will Drive Aerospace Demand

Shared on30 Apr 25Fair value Increased 0.18%

Shared on23 Apr 25

Shared on30 Apr 25
Fair value Increased 0.18%