| Valuation method | Value, € | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 2.60 | -99 |
| Graham Formula | 20.80 | -88 |
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.
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.
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.