HWM

Quick Report on Howmet Aerospace (HWM)

Today we're going to take a closer look at large-cap Industrials company Howmet Aerospace, whose shares are currently trading at $52.91. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!

Howmet Aerospace's P/B and P/E Ratios Are Higher Than Average:

Howmet Aerospace Inc. 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. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Howmet Aerospace has a trailing 12 month P/E ratio of 34.4 and a P/B ratio of 5.71.

Howmet Aerospace's PEG ratio is 1.39, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:

2018 2019 2020 2021 2022 2023
Revenue (MM) $6,778 $7,098 $5,259 $4,972 $5,663 $6,422
Revenue Growth n/a 4.72% -25.91% -5.46% 13.9% 13.4%
Gross Margins -68% 27% 26% 28% 28% 28%
Operating Margins 13% 8% 12% 15% 16% 17%
Net Margins 10% 7% 5% 5% 8% 10%
Net Income (MM) $651 $477 $261 $258 $469 $640
Net Interest Expense (MM) $38 $338 $317 $259 $229 $223
Depreciation & Amort. (MM) $576 $536 $338 $270 $265 $271
Diluted Shares (MM) 503 463 439 435 421 404
Free Cash Flow (MM) -$551 $461 -$258 $250 $540 $689
Current Ratio 1.87 1.42 2.21 2.18 2.12 2.14
Long Term Debt (MM) $5,896 $7,704 $4,699 $4,227 $4,162 $3,989
Net Debt / EBITDA 2.81 7.8 3.59 3.52 2.91 2.65

Howmet Aerospace suffers from weak revenue growth and decreasing reinvestment in the business, slimmer gross margins than its peers, and weak operating margins with a stable trend. The firm's financial statements also exhibit EPS growth achieved by reducing the number of outstanding shares and a highly leveraged balance sheet. On the other hand, the company has a pattern of improving cash flows working in its favor.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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