Howmet Aerospace is the IBD Stock Of The Day for Tuesday. HWM stock flashed a buy signal as it rebounds back toward record highs.
Pittsburgh-based Howmet Aerospace provides engine components and metal parts for the defense, aerospace and transportation industries. Its products include airfoils, rings, forgings and alloys for aero engine and industrial gas turbines, as well as titanium ingots, fastening systems and forged wheels. Among its key customers, Howmet supplies various bulkheads for the Lockheed Martin F-35 Lightning II, which forms the structure of the jet. It also manufactures the fan blades for RTX's Pratt & Whitney PurePower Geared Turbofan Engine. The PurePower engine is utilized by high-volume commercial aircraft, such as the Airbus A320neo.
Meanwhile, Howmet Aerospace has reported strong fundamentals this year amid a recovering commercial aerospace market and a rebound in air travel.
The company's quarterly earnings increases ranged from 26% to 36% gain over the last four quarters, on 14% to 18% revenue growth.
For its Q1 results reported May 2, Howmet delivered a 36% earnings increase to 57 cents per share. Revenue jumped 14% year-over-year to a record $1.82 billion, driven by a 23% increase in commercial aerospace sales. Free cash flow came out to $95 million for the quarter, which marked the first time Howmet achieved positive cash flow in a Q1 period.
The results beat FactSet earnings expectations of 52 cents per share on $1.74 billion in revenue.
Howmet also hiked its 2024 earnings outlook to range from $2.31 to $2.39 per share, up from its previous outlook of $2.10 to $2.20. It now forecasts revenue to range from $7.225 billion to $7.375 billion, increased from $7 billion to $7.2 billion. The guidance boost was ahead of FactSet estimates of a 20% earnings increase to $2.21 per share on 7.6% sales growth to $7.14 billion.
The company plans to boost its third-quarter dividend by 40% to 7 cents per share. Howmet on Feb. 26 paid a quarterly dividend of 5 cents per share.
Howmet Aerospace Stock Performance
Howmet stock rose slightly Tuesday, bouncing further off its 50-day moving average. Shares rebounded above that technical line on Monday.
Howmet Aerospace is trading in a flat base with an 85.52 buy point, plotted off a May 28 high.
Tuesday's boost from the 50-day line also appeared to break a trendline, offering aggressive investors an early entry opportunity.
Howmet Aerospace ranks fourth in the Aerospace/Defense Group according to the IBD Stock Checkup. Heico leads the group.
Howmet Aerospace holds a 97 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. HWM stock has a 91 EPS Rating. The stock's relative strength line has fallen from its late-May highs but Howmet Aerospace still has a muscular 95 RS Rating.
Howmet Aerospace vaulted 49.6% so far this year.
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