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Stock Analysis & ValuationHowmet Aerospace Inc. (48Z.DE)

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175.65
Sector Valuation Confidence Level
Moderate
Valuation methodValue, Upside, %
Artificial intelligence (AI)n/an/a
Intrinsic value (DCF)n/a
Graham-Dodd Method2.60-99
Graham Formula20.80-88

Strategic Investment Analysis

Company Overview

Howmet Aerospace Inc. (48Z.DE) is a leading global manufacturer of lightweight metal products, specializing in aerospace and defense applications. Headquartered in Pittsburgh, PA, the company operates through four key segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. Howmet Aerospace plays a critical role in the aerospace supply chain, producing high-performance components such as investment castings for aircraft engines, aerospace fasteners, titanium structures, and forged aluminum wheels for commercial transportation. With roots dating back to 1888, the company has established itself as a trusted supplier to major aerospace OEMs and industrial gas turbine manufacturers. As the aerospace industry recovers from pandemic-related disruptions and benefits from increasing defense budgets and commercial air travel demand, Howmet Aerospace is well-positioned to capitalize on long-term growth trends in lightweight materials and fuel-efficient aircraft technologies. The company's diversified product portfolio and technological expertise in advanced metal solutions make it a key player in the industrial sector's aerospace and defense vertical.

Investment Summary

Howmet Aerospace presents an attractive investment opportunity in the aerospace and defense sector, supported by its strong market position in critical aircraft components and improving industry fundamentals. The company demonstrated solid financial performance in FY2022 with €5.66 billion in revenue and €469 million net income, generating robust operating cash flow of €733 million. With a market capitalization of approximately €50.6 billion, Howmet benefits from exposure to both commercial aerospace recovery and stable defense spending. Key risks include exposure to cyclical aerospace demand, potential supply chain disruptions, and raw material price volatility. The company's relatively high total debt of €4.28 billion warrants monitoring, though this is partially offset by €791 million in cash reserves. Investors may appreciate the modest dividend yield (€0.1269 per share) while benefiting from potential upside as global air travel continues to normalize post-pandemic.

Competitive Analysis

Howmet Aerospace maintains a strong competitive position in the aerospace components market through its technological expertise in lightweight metals and vertical integration in titanium products. The company's Engine Products segment benefits from long-term contracts with major engine manufacturers, creating stable revenue streams. Its proprietary casting technologies for airfoils and seamless rolled rings provide technical barriers to entry. In Fastening Systems, Howmet competes on precision engineering and reliability, critical factors for aerospace applications. The Engineered Structures segment's vertical integration—from titanium ingots to finished components—provides cost advantages and quality control. Forged Wheels represents a more commoditized business but benefits from scale in commercial vehicle markets. Howmet's main competitive advantages include: 1) Deep aerospace industry relationships and approval processes that create switching costs for customers; 2) Specialized metallurgical knowledge accumulated over decades; 3) Diversified exposure across aircraft platforms and components. However, the company faces pricing pressure from OEMs and competes with larger diversified industrials that may have greater R&D resources. The post-pandemic aerospace recovery and increasing focus on fuel efficiency (driving demand for lightweight components) position Howmet favorably against competitors, though its reliance on Boeing and Airbus production rates remains a key sensitivity.

Major Competitors

  • Howmet Aerospace Inc. (HWM): This is the same company as 48Z.DE, just listed on NYSE rather than XETRA. The US-listed shares have greater liquidity and are the primary listing. All financial and operational characteristics are identical to the German listing.
  • RTX Corporation (RTX): Formerly Raytheon Technologies, RTX is a much larger aerospace and defense conglomerate that competes with Howmet in engine components and aerospace systems. RTX has greater scale and vertical integration as an engine OEM (through Pratt & Whitney), but may be less focused on component-level manufacturing. Its defense business provides diversification Howmet lacks.
  • Heico Corporation (HEI): Heico is a key competitor in aerospace components, particularly in the aftermarket. The company has grown through acquisitions and competes with Howmet in fasteners and engine parts. Heico's focus on cost-reduced alternatives to OEM parts gives it pricing advantages in some segments, though it lacks Howmet's materials science expertise in titanium and advanced alloys.
  • Safran SA (SAF.PA): Safran is a French aerospace giant that competes with Howmet in aircraft engine components and systems. As an engine OEM (through its joint venture with GE), Safran has greater control over engine architecture but relies on suppliers like Howmet for specialized components. Safran's size and European base give it advantages in Airbus supply chains where Howmet may be weaker.
  • TransDigm Group (TDG): TransDigm competes with Howmet in aerospace components, particularly fasteners and engineered systems. Known for its aggressive acquisition strategy and focus on proprietary products, TransDigm has higher margins but more concentrated exposure to aftermarket sales compared to Howmet's balanced OEM/aftermarket mix.
  • Curtiss-Wright Corporation (CW): Curtiss-Wright overlaps with Howmet in precision components for aerospace and defense. The company has strong positions in naval defense and industrial markets that provide diversification Howmet lacks, but may be less focused on advanced aerospace materials. Its smaller scale in commercial aerospace makes it less leveraged to that recovery.
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