Earnings Beat: Howmet Aerospace Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Investors in Howmet Aerospace Inc. (NYSE:HWM) had a good week, as its shares rose 6.3% to close at US$36.56 following the release of its quarterly results. The result was positive overall - although revenues of US$1.3b were in line with what the analysts predicted, Howmet Aerospace surprised by delivering a statutory profit of US$0.31 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Howmet Aerospace

Taking into account the latest results, the consensus forecast from Howmet Aerospace's nine analysts is for revenues of US$5.62b in 2022, which would reflect a meaningful 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 89% to US$1.39. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.62b and earnings per share (EPS) of US$1.39 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$40.55, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Howmet Aerospace at US$43.00 per share, while the most bearish prices it at US$36.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Howmet Aerospace's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 14% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 24% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.9% per year. So it looks like Howmet Aerospace is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Howmet Aerospace going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - Howmet Aerospace has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.