Howmet Aerospace Inc.

HWM · NYSE · USD

Can Howmet convert record demand for engine spares, gas turbine blades and new aircraft into profit faster than the cost of the plants and people needed to supply it?

Last 4 earnings calls · through Q2 FY2026

Bull case

  • Gas turbine growth beyond aerospace

    The bull case rests on gas turbines becoming a second large growth business beside jet engines, with investment backed by customer contracts and aerospace-like returns.

  • Spares outgrow new-build sales

    Engine spares are growing faster than new-build sales, which lifts margins because aftermarket parts do not require the same new plant and equipment.

  • Guidance raised twice this year

    Management has raised its full-year revenue, profit and cash guidance at each of the last two quarterly updates, which bulls read as demand running ahead of plan.

  • Cash returned while investing

    Buybacks, dividends and debt reduction have continued alongside record capital spending, which the bull case says shows growth is funded from cash the business generates.

Bear case

  • Capacity takes years to add

    The bear case argues growth is limited by how fast casting plants can be built and staffed, so strong demand does not become revenue for several years.

  • Cost of adding capacity

    New plants and more than a thousand new employees a year weigh on margins before they help, and management keeps raising the amount it will spend.

  • Airline traffic dependence

    Aircraft builds and engine spares depend on airlines filling seats, so a slowdown in travel or freight would cut demand for both new parts and repairs.

  • Acquisition integration and debt

    The fastener acquisitions bring lower margins and more debt, with the earnings benefit expected mostly from next year rather than now.

Bull and bear points

Growth & Execution

In short: Gas turbine and engine spares demand is strong, while new plant capacity only arrives in stages through 2029.

Bull · 2

  • Gas turbine base is expected to double within three to five years

    That would create a second business approaching the size of engine spares and spread revenue beyond aircraft, and management says the work earns margins similar to aerospace.

    Q4 FY2025 call

  • Turbine contracts moved from four of seven customers to all seven

    A year ago terms were agreed with four of the seven gas turbine customers and the rest were still negotiating; now all seven are signed and some want to raise volumes again.

    Tone shiftQ4 FY2025 → Q2 FY2026
Bear · 2

  • New gas turbine capacity takes about two years from commitment to output

    Management said a decision taken now would not produce parts until 2028, so revenue from recent demand increases lands only after next year.

    Q2 FY2026 call

  • Aerospace growth is capped by aircraft build rates Howmet does not set

    Guidance rests on specific 737, 787, A320 and A350 monthly rates, and management said output is still running slightly behind the rates its customers project.

    Q1 FY2026 call

Profitability & Financial Strength

In short: Margins and cash flow are at records, while capital spending and acquisition debt absorb much of the gain.

Bull · 2

  • Full-year earnings and cash guidance has been raised twice since February

    In February the company guided to $4.45 of earnings per share and $1.6 billion of free cash flow; by August those stood at $5.27 and $1.9 billion, with increases across markets.

    Tone shiftQ4 FY2025 → Q2 FY2026

  • Operating margin rose to 27.9% in the second quarter from 25.4% a year earlier

    Management credits yield, content and price rather than one-off gains, which means the improvement comes from how the plants run rather than from a single quarter's timing.

    Q3 FY2025 call
Bear · 2

  • Capital spending keeps climbing and more is already planned for next year

    Capital spending was $430 million over the last twelve months and management expects to exceed $500 million this year, so free cash flow depends on holding the 90% conversion target.

    Q2 FY2026 call

  • The $1.8 billion fastener deal adds debt before it adds earnings

    Net debt rose to $3.5 billion from $2.7 billion a year earlier, and interest on the new notes holds earnings per share flat until the deal contributes in 2027.

    Q1 FY2026 call

Market Position

In short: Howmet is the largest maker of gas turbine blades, while aircraft and truck demand are cyclical.

Bull · 2

  • Howmet holds more than half the global market for gas turbine blades

    That means the turbine market can only grow as fast as Howmet adds casting capacity, and management expects newer blade designs to raise revenue per turbine on top of volume.

    Q2 FY2026 call

  • Spares grew past the 20% of revenue management expected

    Management had expected spares to reach about 20% of revenue across 2025 and 2026; spares were 21% for the full year 2025 and 23% in the first quarter of 2026.

    Tone shiftQ4 FY2025 → Q1 FY2026
Bear · 2

  • Gas turbine blades go to a short list of named equipment makers

    A decision by GE Vernova, Siemens, Mitsubishi Heavy or their peers to split work between suppliers or bring it in house would remove a large share of that business.

    Q4 FY2025 call

  • Revenue has fallen sharply before when aerospace demand turned down

    Revenue fell 80% between FY2011 and FY2021, and management noted some airlines have already drawn up lower volume contingency plans as fuel prices moved.

    Q1 FY2026 call