HOWMET AEROSPACE INC (HWM) Stock Fundamental Analysis
NYSE:HWM - New York Stock Exchange, Inc. - US4432011082 - Common Stock - Currency: USD
Taking everything into account, HWM scores 7 out of 10 in our fundamental rating. HWM was compared to 65 industry peers in the Aerospace & Defense industry. HWM has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. HWM is quite expensive at the moment. It does show a decent growth rate. These ratings would make HWM suitable for quality investing!
1. Profitability
1.1 Basic Checks
HWM had positive earnings in the past year.
HWM had a positive operating cash flow in the past year.
In the past 5 years HWM has always been profitable.
Each year in the past 5 years HWM had a positive operating cash flow.
1.2 Ratios
HWM has a better Return On Assets (10.96%) than 92.19% of its industry peers.
The Return On Equity of HWM (25.32%) is better than 92.19% of its industry peers.
HWM has a Return On Invested Capital of 14.93%. This is amongst the best in the industry. HWM outperforms 96.88% of its industry peers.
The Average Return On Invested Capital over the past 3 years for HWM is above the industry average of 7.98%.
The last Return On Invested Capital (14.93%) for HWM is above the 3 year average (11.81%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.96% | ||
| ROE | 25.32% | ||
| ROIC | 14.93% |
ROA(3y)7.61%
ROA(5y)5.52%
ROE(3y)19.06%
ROE(5y)14.35%
ROIC(3y)11.81%
ROIC(5y)9.94%
1.3 Margins
The Profit Margin of HWM (15.52%) is better than 90.63% of its industry peers.
HWM's Profit Margin has improved in the last couple of years.
HWM's Operating Margin of 22.26% is amongst the best of the industry. HWM outperforms 96.88% of its industry peers.
HWM's Operating Margin has improved in the last couple of years.
HWM's Gross Margin of 31.10% is fine compared to the rest of the industry. HWM outperforms 73.44% of its industry peers.
In the last couple of years the Gross Margin of HWM has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 22.26% | ||
| PM (TTM) | 15.52% | ||
| GM | 31.1% |
OM growth 3Y9.72%
OM growth 5Y6.18%
PM growth 3Y44.45%
PM growth 5Y18.67%
GM growth 3Y3.97%
GM growth 5Y3.11%
2. Health
2.1 Basic Checks
HWM has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, HWM has less shares outstanding
HWM has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, HWM has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 7.46 indicates that HWM is not in any danger for bankruptcy at the moment.
HWM has a Altman-Z score of 7.46. This is amongst the best in the industry. HWM outperforms 82.81% of its industry peers.
The Debt to FCF ratio of HWM is 3.39, which is a good value as it means it would take HWM, 3.39 years of fcf income to pay off all of its debts.
HWM has a better Debt to FCF ratio (3.39) than 81.25% of its industry peers.
A Debt/Equity ratio of 0.73 indicates that HWM is somewhat dependend on debt financing.
The Debt to Equity ratio of HWM (0.73) is worse than 67.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.73 | ||
| Debt/FCF | 3.39 | ||
| Altman-Z | 7.46 |
ROIC/WACC1.61
WACC9.26%
2.3 Liquidity
A Current Ratio of 2.17 indicates that HWM has no problem at all paying its short term obligations.
HWM has a Current ratio (2.17) which is comparable to the rest of the industry.
HWM has a Quick Ratio of 2.17. This is a bad value and indicates that HWM is not financially healthy enough and could expect problems in meeting its short term obligations.
HWM has a Quick ratio of 0.98. This is in the lower half of the industry: HWM underperforms 65.63% of its industry peers.
The current and quick ratio evaluation for HWM is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.17 | ||
| Quick Ratio | 0.98 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 45.41% over the past year.
HWM shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 4.88% yearly.
Looking at the last year, HWM shows a quite strong growth in Revenue. The Revenue has grown by 11.90% in the last year.
The Revenue has been growing slightly by 0.92% on average over the past years.
EPS 1Y (TTM)45.41%
EPS 3Y38.62%
EPS 5Y4.88%
EPS Q2Q%39.62%
Revenue 1Y (TTM)11.9%
Revenue growth 3Y14.33%
Revenue growth 5Y0.92%
Sales Q2Q%9.24%
3.2 Future
HWM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 19.01% yearly.
The Revenue is expected to grow by 9.50% on average over the next years. This is quite good.
EPS Next Y23.83%
EPS Next 2Y22.37%
EPS Next 3Y20.28%
EPS Next 5Y19.01%
Revenue Next Year8.92%
Revenue Next 2Y10.02%
Revenue Next 3Y9.42%
Revenue Next 5Y9.5%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 48.26, which means the current valuation is very expensive for HWM.
Compared to the rest of the industry, the Price/Earnings ratio of HWM is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 29.63, HWM is valued quite expensively.
Based on the Price/Forward Earnings ratio of 38.98, the valuation of HWM can be described as expensive.
HWM's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 22.68. HWM is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 48.26 | ||
| Fwd PE | 38.98 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of HWM is on the same level as its industry peers.
Based on the Price/Free Cash Flow ratio, HWM is valued a bit cheaper than 64.06% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 53.99 | ||
| EV/EBITDA | 30.55 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates HWM does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of HWM may justify a higher PE ratio.
A more expensive valuation may be justified as HWM's earnings are expected to grow with 20.28% in the coming years.
PEG (NY)2.03
PEG (5Y)9.89
EPS Next 2Y22.37%
EPS Next 3Y20.28%
5. Dividend
5.1 Amount
HWM has a yearly dividend return of 0.29%, which is pretty low.
Compared to an average industry Dividend Yield of 1.45, HWM pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.29, HWM pays less dividend than the S&P500 average, which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.29% |
5.2 History
On average, the dividend of HWM grows each year by 16.52%, which is quite nice.
HWM has paid a dividend for at least 10 years, which is a reliable track record.
HWM has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)16.52%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
9.45% of the earnings are spent on dividend by HWM. This is a low number and sustainable payout ratio.
The dividend of HWM is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP9.45%
EPS Next 2Y22.37%
EPS Next 3Y20.28%
129.83
-8.61 (-6.22%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners93.64%
Inst Owner Change0.89%
Ins Owners1.05%
Ins Owner Change-0.57%
Market Cap52.74B
Analysts80
Price Target134.71 (3.76%)
Short Float %2.24%
Short Ratio3.64
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.29% |
Yearly Dividend0.27
Dividend Growth(5Y)16.52%
DP9.45%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.72%
Min EPS beat(2)2.1%
Max EPS beat(2)7.34%
EPS beat(4)4
Avg EPS beat(4)7.18%
Min EPS beat(4)2.1%
Max EPS beat(4)10.4%
EPS beat(8)8
Avg EPS beat(8)7.38%
EPS beat(12)10
Avg EPS beat(12)5.69%
EPS beat(16)14
Avg EPS beat(16)5.69%
Revenue beat(2)0
Avg Revenue beat(2)-1.09%
Min Revenue beat(2)-1.87%
Max Revenue beat(2)-0.32%
Revenue beat(4)2
Avg Revenue beat(4)0.79%
Min Revenue beat(4)-1.87%
Max Revenue beat(4)3.99%
Revenue beat(8)6
Avg Revenue beat(8)2.2%
Revenue beat(12)9
Avg Revenue beat(12)1.6%
Revenue beat(16)9
Avg Revenue beat(16)0.56%
PT rev (1m)0.73%
PT rev (3m)14.28%
EPS NQ rev (1m)-0.11%
EPS NQ rev (3m)2.2%
EPS NY rev (1m)0.04%
EPS NY rev (3m)1.64%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.05%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)-0.09%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 48.26 | ||
| Fwd PE | 38.98 | ||
| P/S | 7.1 | ||
| P/FCF | 53.99 | ||
| P/OCF | 40.64 | ||
| P/B | 11.58 | ||
| P/tB | 764.42 | ||
| EV/EBITDA | 30.55 |
EPS(TTM)2.69
EY2.07%
EPS(NY)3.33
Fwd EY2.57%
FCF(TTM)2.4
FCFY1.85%
OCF(TTM)3.2
OCFY2.46%
SpS18.29
BVpS11.21
TBVpS0.17
PEG (NY)2.03
PEG (5Y)9.89
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.96% | ||
| ROE | 25.32% | ||
| ROCE | 18.44% | ||
| ROIC | 14.93% | ||
| ROICexc | 15.94% | ||
| ROICexgc | 34.16% | ||
| OM | 22.26% | ||
| PM (TTM) | 15.52% | ||
| GM | 31.1% | ||
| FCFM | 13.15% |
ROA(3y)7.61%
ROA(5y)5.52%
ROE(3y)19.06%
ROE(5y)14.35%
ROIC(3y)11.81%
ROIC(5y)9.94%
ROICexc(3y)12.73%
ROICexc(5y)10.88%
ROICexgc(3y)28.49%
ROICexgc(5y)24.58%
ROCE(3y)14.58%
ROCE(5y)12.27%
ROICexcg growth 3Y22.26%
ROICexcg growth 5Y20.98%
ROICexc growth 3Y24.64%
ROICexc growth 5Y14.79%
OM growth 3Y9.72%
OM growth 5Y6.18%
PM growth 3Y44.45%
PM growth 5Y18.67%
GM growth 3Y3.97%
GM growth 5Y3.11%
F-Score9
Asset Turnover0.71
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.73 | ||
| Debt/FCF | 3.39 | ||
| Debt/EBITDA | 1.71 | ||
| Cap/Depr | 115.88% | ||
| Cap/Sales | 4.32% | ||
| Interest Coverage | 9.19 | ||
| Cash Conversion | 67.22% | ||
| Profit Quality | 84.74% | ||
| Current Ratio | 2.17 | ||
| Quick Ratio | 0.98 | ||
| Altman-Z | 7.46 |
F-Score9
WACC9.26%
ROIC/WACC1.61
Cap/Depr(3y)89.74%
Cap/Depr(5y)84.39%
Cap/Sales(3y)3.68%
Cap/Sales(5y)4.02%
Profit Quality(3y)96.58%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)45.41%
EPS 3Y38.62%
EPS 5Y4.88%
EPS Q2Q%39.62%
EPS Next Y23.83%
EPS Next 2Y22.37%
EPS Next 3Y20.28%
EPS Next 5Y19.01%
Revenue 1Y (TTM)11.9%
Revenue growth 3Y14.33%
Revenue growth 5Y0.92%
Sales Q2Q%9.24%
Revenue Next Year8.92%
Revenue Next 2Y10.02%
Revenue Next 3Y9.42%
Revenue Next 5Y9.5%
EBIT growth 1Y34.91%
EBIT growth 3Y25.44%
EBIT growth 5Y7.15%
EBIT Next Year30.91%
EBIT Next 3Y18.86%
EBIT Next 5Y21.35%
FCF growth 1Y43.26%
FCF growth 3Y57.51%
FCF growth 5YN/A
OCF growth 1Y44.06%
OCF growth 3Y42.45%
OCF growth 5Y23%