Howmet Aerospace

IThe business

Howmet Aerospace is the engine-parts maker that came out of Alcoa and Arconic. Its predecessor was Alcoa Inc., formed in 1888, and it took its present form on 1 April 2020, when Arconic Corporation was split off with the rolled aluminum and building products.⁷ What stayed is a set of businesses that make hard things out of nickel, titanium, aluminum and steel for aircraft, power plants and trucks. It is based in Pittsburgh, employs about 25,400 people in 23 countries, and had $8.3B of sales in 2025.⁷

It reports four segments. In the first nine months of 2026, Engine Products had $4.1B of revenue, Fastening Systems $1.7B, Engineered Structures $0.9B and Forged Wheels $0.9B.⁴ By end market, commercial aerospace was 53% of 2025 sales, defense aerospace 17%, commercial transportation 15%, gas turbines 11% and other 4%.⁷ Two customers matter most. GE Aerospace was about 14% of sales in the first nine months of 2026 and RTX about 11%, mostly through Engine Products.⁴ That is a quarter of the company in two accounts.

Engine Products

This is the heart of it. The segment casts the airfoils, the blades and vanes inside the hot section of a jet engine, along with seamless rolled rings and other rotating and structural parts.⁴ A blade in the high-pressure turbine sits in air hotter than the metal would survive, so it is grown as a single crystal, hollowed out with fine cooling passages and coated. Howmet says the turbine inlet temperature of a modern commercial jet is about 2,500°F and of the F-35’s engine about 3,600°F.⁶ Third-quarter revenue was $1.45B, up 33%, with a segment EBITDA margin of 39.1%.³

The same technique serves gas turbines on the ground. Howmet describes itself as the largest maker of gas turbine blades in the world, and expects its gas turbine revenue to roughly double from about $1B in 2025 to over $2B in three to five years.⁶ Gas turbine revenue grew 45% in the third quarter.³ I cover the customers on my GE Vernova page, since GE Vernova is one of the machine builders that need these blades.

Fastening Systems, Engineered Structures and Forged Wheels

Fastening Systems makes the bolts, collars, blind fasteners, fluid fittings and installation tools that join aircraft and engines together. It had $1.75B of sales in 2025 and 54% of them were under long-term agreements.⁶ In 2026 it bought Brunner for about $120M in February and Consolidated Aerospace Manufacturing, or CAM, from Stanley Black & Decker for about $1.8B in April.⁴ Together they added $135M of sales in the third quarter, so about $540M a year, which makes the price about 3.6 times sales C (calculated).⁵⁴ I cannot see CAM’s profit, so I cannot say what that price is for.

Engineered Structures makes titanium ingots, mill products, forgings and extrusions for airframes, engines and landing gear. It sold its disk forging plant in Savannah on 31 March 2026 for $230M and booked a $93M gain.⁴ Revenue fell 4% in the third quarter and rose 8% without Savannah.³ Forged Wheels makes aluminum truck wheels under the Alcoa brand. It has been the weak spot, 15% of sales in 2025 against 21% in 2023, and the company said at its March 2026 market day that it expected truck builds to recover in the second half.⁷⁶ In the third quarter wheels revenue rose 32%, helped by aluminum cost pass-through, and margin fell to 26.3%.³

What a Howmet part is, and why spares matter

Howmet sells in two ways. New parts go into engines and aircraft as they are built, and so follow production rates. Spares go into engines that are already flying, when they come in for overhaul, so they follow flying hours and the age of the fleet. The company said in March that spares were about 11% of revenue in 2020 and over 20% in its 2026 plan.⁶ That is a share of about $2B a year, and the third-quarter release said engine spares grew again.³ It is the best part of the business, because spare parts are sold into an installed base at prices set long after the engine was designed.

The company expects revenue of about $11.5B in 2027, up about 12% on its raised 2026 guide of $10.3B.³ The industry data it quotes, from Jefferies and Cirium, has large commercial aircraft deliveries going from 1,404 in 2025 to 2,149 in 2030, and the global fleet growing about 27% from 2022 to 2030.⁶ Those are the company’s chosen sources, not mine. They matter because the order backlogs at Airbus and Boeing are the reason Howmet can plan ahead: see my Airbus and Boeing pages for how long those queues are and how much engine supply limits them.

IIThe moat

The protection here is about parts that are certified, hard to make and hard to swap, not a brand or a network. Four sources are worth separating, because they do not last equally long.

Certified parts and the first-article problem

An aircraft engine part is approved for a given engine against a given process and source. Changing the source means proving the new one again to the engine maker and the regulator. I read that as a delay of a year or more for a new airfoil E (estimate), in a business where the customer’s own problem is that it cannot get enough parts now. The 10-K says Howmet’s products can be made by competitors using similar or alternative processes, and that a few of its largest customers have captive superalloy furnaces.⁷ So the barrier is switching cost and capacity, not a patent. The company holds about 1,020 granted patents and 180 pending applications, and says it is not dependent on any one.⁷

Scale in vertically integrated casting

Howmet melts its own alloys, forms its own ceramic cores, casts, coats and inspects, and builds its own furnaces and tools.⁶ It says it can make more than 90% of all the structural and rotating parts in an aero engine.⁷ That breadth lets it quote a customer for a family of parts, not a single part. It also means a failure in one process, such as cores, can stop a whole line. The company says its digital thread tracks every core, wax pattern and casting through each operation.⁶ That is how it argues it can raise yield as it expands.

Sole-source positions: what I can and cannot say

The question I was asked about is where Howmet is the only source on a part. The honest answer is that its filings do not list them. The 10-K names the sources of its biggest competitors, which are Precision Castparts, owned by Berkshire Hathaway, for titanium, forgings, rings, castings and fasteners; VSMPO, ATI and Aubert & Duval for forgings and titanium; Lisi for fasteners; and Doncasters and Consolidated Precision Products for castings.⁷ It names no engine or part where Howmet is the only qualified source. Management has described strong positions on the LEAP, the Geared Turbofan and the F135, and the company says F-35 parts were about 45% of its defense aerospace revenue in 2025.⁶ But how many parts on each engine are single-source, and for how long, I cannot tell from public documents. That is a key input I cannot judge, and I do not give the company a number for it.

Evidence it is widening

The 10-Q says plainly that product price increases are in excess of material and inflationary cost pass-through.⁴ That is the cleanest evidence of pricing power in any filing: revenue is rising partly because Howmet charges more, not only because it ships more. Engine Products margin has risen from 32.6% in the first quarter of 2025 to 39.1% in the third quarter of 2026.³ The company told its investors in March that it was capturing price and share in long-term agreement renewals.⁶ Agreements that renew at higher prices lift profit for several years.

Evidence it is narrowing

Customers are not passive. The 10-K lists consolidation among its customers and competitors as a risk, and says a combined entity could replace Howmet with a rival.⁷ Engine makers have captive foundries and could add their own capacity when parts are short. In September 2026 a market scare took the stock down about 21% from its high on reports that SpaceX and Tesla might make their own turbine blades.¹⁰ The origin of the story was not in a primary document I could open, and a new entrant is a long way from a certified blade, but it shows how little room the price leaves for competition.

My judgement: the protection is real, and strongest in spares and in single-crystal casting. It is weakest where customers can dual-source or where a part is simply capacity. I would pay a high multiple for the first and a normal one for the second. The price pays a very high multiple for all of it.

IIIThe competitive advantage

Howmet makes engine parts as its main business. Its closest rival, Precision Castparts, belongs to Berkshire Hathaway; see my Berkshire Hathaway page for how it sits in that group. So the better comparison for this price is other aerospace names on this site.

The table says what the section is about. Of the five, Howmet is the furthest above its own base and the only one more than 40% above its bull. That does not mean the business is worse. It means the price asks for more. If I am choosing where the next dollar goes, the page on this site nearest to its value is Airbus, at 16% above base and 13% under bull, and Howmet at the same 16% premium would be about $119 C (calculated).

Where Howmet wins

Margin first. In the third quarter Engine Products made 39.1% and all four segments together 33.6%, with a corporate cost of about $105M a year.³⁵ Those are high numbers for a maker of metal parts. Next, balance sheet: debt is $4.4B, cash $0.5B, and net debt is 1.3 times trailing EBITDA, down from about 3 times in 2020.⁵⁶ Credit ratings are now at least BBB+, Baa1 and A- at the three agencies.⁸ And the mix: gas turbine and commercial aero demand both pull on the same casting capacity, which is why it is adding plants.

Where it loses

Customer power. When two customers are a quarter of sales and they build their own parts as well, the long-term agreements are not a one-way street. Forged Wheels, with 95% of revenue on metal and tariff pass-through, is a lower-return business and has been a drag on margin in the last two quarters.⁶³ And the capex bill is rising: the company now plans about $515M in 2026, up from about $470M in February, and says spending will be elevated beyond 2027.⁵³ Competitors are free to add capacity too, and capacity that is scarce now tends to attract it.

IVManagement

John Plant, 72, is Executive Chairman and Chief Executive Officer. He has chaired the board since October 2017, ran Arconic Inc. as chief executive from February 2019, and has been sole chief executive since October 2021. Before that he ran the car-parts maker TRW from 2003 to 2015, until it was sold to ZF.⁷ The company itself, in the proxy, credits him with a market value that grew from $5.75B on 1 April 2020 to $82.43B at the end of 2025, and a total return of 1,474% over that time.⁸ Those numbers are a fair summary of why he is still in the job at 72. They are also a starting point that was the bottom of a pandemic.

The point to take from the table is that the finance, legal and administrative roles all changed between August and December 2025, and the person who is chairman and chief executive is 72. I do not read that as a problem by itself. The company has a deep bench of segment presidents. But it does mean the next several years, which are the years the price depends on, rest on one man and a new finance chief.

How they are paid, and what that pays them to do

Follow the incentive. Plant’s reported pay for 2025 was $70.5M: $1.8M of salary, a $6.3M cash bonus and $62.1M of stock.⁸ The stock figure is one annual grant of $17.1M plus a one-time $45M retention grant made on 1 July 2025 that vests on 1 July 2028. The board said it was unanimous in wanting to keep him, was aware that “several high-profile external roles” might become available, and that shareholders had urged it to retain him.⁸ The grant pays him to stay for three years. It does not pay him on results, since it vests with time.

Now look at what the rest measures. The bonus plan for 2025 weighted free cash flow and adjusted EBITDA, with a strategic goal on top. The free cash flow target range was $960M to $1,070M and the result was $1,431M; the EBITDA range was $2.00B to $2.10B and the result was $2.42B.⁸ Both were far above the maximum, the payout was 200%, and the board gave the maximum on the strategic goals too.⁸ The 2023 performance shares paid 200% as well, on a three-year rise in EBITDA of $1.14B against a $0.32B maximum.⁸ Both plans pay for growth in profit and cash. Neither pays for return on the money put into the business, which is what an owner would want when capital spending is rising from $453M in 2025 to about $515M in 2026 and a $1.9B deal has just closed.⁵⁴ Targets that are beaten by this much are either set low or set before a boom. I cannot tell which. The effect is the same: the plan paid its maximum for a year that was mostly a gift of the cycle and price.

How much of their own money is in

A lot, and some has come out. The proxy shows Plant owning 2,816,585 shares at 24 March 2026, including 787,730 held in family trusts, and another 34,406 deferred restricted units.⁸ At $213.56 that is about $601M C (calculated). Directors own little outright: four of the eight non-executive directors own no shares and none owns more than 10,000, so their stake is mostly deferred units.⁸ I read 66 Forms 4 from January 2025 to now. Plant made one open-market sale: 800,000 shares on 12 May 2025 at about $157, for $125.6M, roughly a fifth of what he held.⁹ Marchuk sold 117,082 shares for $27.4M across 2025 and 2026.⁹ No insider bought a share in the open market.⁹ I do not read the sale as a signal. It was at $157, a long way under today’s price, and it kept him a large holder. But a retention grant, a large sale and a bonus at the cap sit side by side, and I would ask the board how they fit together.

What they did with capital

The pattern is steady, if not heroic. Management paid down debt first, which made the company safe, then bought back stock, then bought a business. The shift in 2026 is the change in scale: the buyback was $0.7B in 2025 and is $1.1B in nine months, and the board has just added $5.0B to the authorization, for $5.4B in all.³ At a $85B market value that authorization is about 6% of the company. If shares are worth $103, each dollar spent at $213 returns about 48 cents of value. If I am wrong about the value, it is a fine use of cash. The test of a buyback is the price paid, and the price is the thing I am arguing about.

VFinancials

Howmet’s reporting history is short. The company separated from Arconic Corporation on 1 April 2020, and earlier years include the rolled products and building businesses that left, so I use the continuing business from 2020, with 2019 in the segment table.⁶ Two kinds of earnings sit side by side. GAAP net income for the twelve months to September was $2.05B. The company’s adjusted figures leave out restructuring, acquisition costs and one-off tax items, and they are close to GAAP here: adjusted EPS of $4.01 for nine months against GAAP of $4.18, because of a $93M gain on Savannah.³

The guide has moved a long way in nine months. In February the company expected $9.1B of revenue and $4.45 of adjusted earnings per share for 2026, before the CAM deal; the October guide is $10.3B and $5.50.¹¹³ Part of that is the acquisitions, and part is a stronger market and better pricing. A company that raises its guide by 13% in revenue and 24% in earnings is not guiding conservatively, and the 2020 record is a reminder of how fast the arithmetic reverses.

Read the table across. Revenue grew from $5.3B to $9.7B and adjusted EBITDA nearly tripled from $1.1B to $3.1B, so EBITDA margin rose from 20.6% to 31.7%. Free cash flow grew from $0.4B to $1.9B. Capital spending was low, $193M to $219M in 2022 and 2023, while the company used its existing plants harder, and then rose to $453M in 2025. That low spend flatters the early cash flow. Diluted shares fell 9%, from 439M to 400M, which is real but small beside the profit growth.

Engine Products is the story: from 22.7% in 2019 to 39.1% in the third quarter. Structures has improved from a low base, 14.2% to 23.7%, as the company dropped low-margin business. Fastening Systems fell from 28.4% to 20.6% in the 2023 trough and has come back to about 30%. Wheels has stayed in the high 20s. In all, the company’s 2026 guide is for an adjusted EBITDA margin of 32.3% on $10.3B of revenue.³ The mix is why the whole is higher than most: the highest-margin segment is growing the fastest.

The last downturn

The one stress test the company has faced as a standalone is 2020. Revenue fell 26% in 2020 and a further 5% in 2021, and did not pass its 2019 level until 2024.⁶ Net debt was 3.2 times EBITDA at the end of 2020, and the stock traded near $13 in April 2020. Free cash flow stayed positive, at $0.39B.⁶ That is a good result, but it is a result for a business with $5.3B of sales and a fixed cost base of that size. Today’s base is nearly twice as large and is being expanded.

What an owner can really take out

The reported number is adjusted EPS, $5.50 in the 2026 guide. The number I use is owner cash: what is left after the capital the business needs and after paying employees in stock. Free cash flow is guided at about $2.0B for 2026.³ It is reached by adding back stock pay, which is a real cost, since it dilutes owners or costs cash to offset. Stock pay was $80M in nine months, about $107M for the year E (estimate).⁴ Capital spending of $515M is above depreciation of $345M by $170M, and that part is growth, not standing still C (calculated).⁵

The gap between reported earnings and owner cash is 14%. It is not large, which is a good sign, and the company converts about 90% of net income to free cash flow as a matter of policy.⁵ But the starting yield is the thing. An owner of the whole company at today’s market value collects about 2.2% of it in a year as cash, against a 4.90% Treasury. That is why the price must be paid for growth, and why the section on valuation asks how much.

Balance sheet and quality of earnings

Total debt is $4.44B at an average rate near 4.3%, against $0.51B of cash. Net debt to trailing EBITDA is 1.3 times, up from 1.0 times at the end of 2025 because of the CAM deal. The bank covenant caps net debt at 3.75 times EBITDA.⁵⁴ Interest was about $185M a year against operating profit of about $3.0B. The pension and retiree obligations on the balance sheet are $0.53B, down about half since 2020, and the company also has $250M of receivables sold.⁴⁶ The balance sheet is not a worry. The growth in receivables and inventory is the thing to watch: they rose $284M and $117M in nine months, and net headcount rose about 1,240.⁴⁵

The operational tax rate of 20.5% is helped by a US deduction for foreign-derived income, and the company’s cash tax rate is about 18%.⁵ I use 21% in my model, a point above the guide. Discrete tax gains were $35M in nine months, small beside $2.1B of pretax income but a reason GAAP EPS exceeds the adjusted figure.⁴ Nothing in the statements looks like an attempt to flatter the numbers. What flatters them is the cycle.

VIValuation

First, how this goes badly wrong

Before any numbers, I asked what would most likely ruin this investment, and worked back from there. Three things can do it.

• Output turns down, and margin goes with it. Howmet sells into aircraft and engine production rates. In 2020 its sales fell 26% and in 2021 a further 5%.⁶ Today’s capacity, 1,240 hires in nine months and $515M of capital spending, was built for rates that have not yet been reached. If the airframers miss, or an engine problem stops deliveries, the plants are too large for the orders, and the 39% margin in Engine Products is the first thing to go.
• The gas turbine surge is a queue. Gas turbines were 13% of third-quarter sales and grew 45%.³ It is a smaller part of the company than the share price implies, and queues empty. My GE Vernova page shows two earlier turbine booms that ended in a collapse in orders. This business is exposed to the next one, and to buyers who make their own blades.
• Customers take back the price. The two largest customers are 25% of sales and renew long-term agreements on a schedule. Pricing above cost is the reason for the margin, and it is a negotiation, not a fact.⁴⁷ The cost of being wrong is large because, at $213.56, the price pays for very little to go wrong.

The shares fell 33% from the 18 August close to the close on 28 October, the day before the report, and I found no company news behind it. They then rose 5.5% on 29 October, the day of the report, when the company raised its guide.¹³ That is a market asking the same question as this section.

What an owner can take out

The reported number is $5.50 of adjusted earnings per share for 2026. What an owner can actually take out is about $1.89B, after $0.11B of stock pay and the capital the plants need, which is 2.2% of the market value and 86% of adjusted net income.³⁵ I use owner cash, not the company’s free cash flow, in the model: the free cash flow it reports ignores stock pay, and in a company where the chief executive was given $62M of stock in one year, that is not small. In the model, stock pay is in EBITDA already, because adjusted EBITDA is struck after it.⁴

What I cannot judge

Four inputs sit under every number below, and I cannot know any of them. First, how many of Howmet’s parts are single-source on engines that fly for thirty years: the filings do not say. Second, where margin settles once price catches up with cost and customers push back. Third, how long the aerospace upcycle runs, which depends on engine problems, supply and demand, and the airlines’ money. Fourth, whether gas turbine demand after 2028 is a plateau or a spike. I give ranges, not a point. The bear to bull spread, $62 to $150, is the honest answer to how little I can narrow them.

The valuation, step by step

I model ten years, 2027 to 2036, by end market. For each case I set growth by market, EBITDA margin, capital spending, and a working capital charge of 20% of each year’s increase in revenue. Tax is 21% of operating profit after depreciation. Depreciation is 3.4% of revenue. I take no credit for future buybacks and I use 399M shares. The starting net position is $4.1B of net debt at end 2026, as set out in the method note. After year ten I assume 3.0% growth.

The discount rate is 9.5%. The capital asset pricing model starts with the 4.90% ten-year Treasury in Q4 2026 and Damodaran’s 4.20% implied equity risk premium.¹²¹³ Howmet’s beta over five years is 1.13 on weekly returns and 1.29 on monthly returns, which gives 9.7% and 10.3% C (calculated).¹¹⁴ I take 9.5%, the same as my Boeing page. Aerospace has a long backlog and visible demand, but the 2020 record argues against a lower rate. The sensitivity table below runs from 7.5% to 11.5%, so a reader who prefers 8.5% can read the answer.

Bear

Aircraft output stalls around 2029 and 2030 for the usual reasons: a recession, an engine fault, or airlines deferring deliveries. Commercial aerospace falls 4% and then 6% in two years, as it fell far more in 2020, and spares slow with it. Gas turbine orders stop as the power build ends, and sales fall 8% and 15%. Customers use the slack to push prices back at renewal, and margin falls from 33% to 28%, just under the 29.3% of 2025. Revenue ends at $12.4B, about a fifth more than in 2026, and the value is $62.

Base

The company gets to its $11.5B for 2027 and keeps growing in the high single digits through 2030 as aircraft output rises and gas turbine sales double. Margin edges up to 34% and then drifts down to 32% as customers take some of the price back and the new capacity costs money. There is no recession in ten years, which is generous. Revenue reaches $14.8B in 2030 and $18.7B in 2036. The value is $103.

Bull

The aerospace upcycle lasts into the 2030s, with commercial aerospace growing 13% a year to 2028 and gas turbine revenue rising about 2.5 times by 2030. Spares keep gaining share and Howmet takes price on every renewal. Margin climbs to 37.5%, above anything in its history. Revenue reaches $23.8B in 2036, 8.8% a year. The value is $150, and the price is 43% above even that.

What the price says

I ran the model backward. At $213.56 the market value is $85.2B and, with net debt of $4.1B, the business is priced at $89B. My base cash flows are worth $45B at 9.5%. The gap is $44B.

In plain words: the price needs growth about 10 points a year higher than my base in every market, for ten years, which is 16% a year and revenue of $44B in 2036. That is about half the size of RTX today, built by a supplier. No margin gets there alone: the margin needed is about 59%. Nor does the discount rate: it would have to be 6.3%, about 3 points under my 9.5% and only 1.4 points above the 10-year Treasury. The price is a bet either on a much longer upcycle, or on a much higher multiple at the end of it, or both.

That second route is how the market usually thinks, so it needs a test. If the shares trade at a given multiple of earnings at the end of 2030, what does a buyer today earn? The table does it. My base earnings per share in 2030 are $9.28, assuming interest keeps falling and the share count falls 1.2% a year. To earn my 9.5% a year to the end of 2030, the shares would need to trade at about 34 times those earnings. The table shows what lower multiples give.

On my base earnings, a buyer today earns about 2.3% a year if the stock is at 25 times in 2030, −3.1% at 20 times, and 10.9% at 35 times, which is close to today’s multiple. So the market’s price works only if Howmet is still priced like a growth company at the end of 2030, with earnings about 70% above today’s.

Even with margins 3 points above my base, growth 2 points a year above my base, and 9.5%, the value is $134. A stress case, a 2020-style fall in 2028 and 2029 with margin down to 25%, gives $58.⁶ It carries no weight.

Is my value after 2036 too low?

Half of each case sits in the value after 2036. In my base it is 56% of the total, and it equals 10.6 times 2036 adjusted EBITDA E (estimate). That comes out of the formula, a business growing 3% a year discounted at 9.5%, not from a multiple I chose. It is far below the 29 times trailing EBITDA the market pays today C (calculated) and the 35 times at the end of 2025 C (calculated).⁸⁶ A buyer in 2036 could pay more for margins like these. If the exit is 15 times 2036 EBITDA, my base is $129 and my bull $187. At 20 times, the base is $159 and the bull $231, which is above the price. To reach $213.56 on my base cash flows, the exit would have to be about 29 times, the multiple of today. So the price assumes Howmet is still valued like a growth company in 2036, after ten years of my base growth. I cannot rule that out, and the range above does not include it.

The margin of safety, and the price against the range

My margin-of-safety price is $82. It is the price at which my $62 bear value is three quarters of what I pay. At $82 my base cash flows return 12% a year and the bear case 6.1%. The stock last closed that low on 24 July 2024, and last closed at or below my base value on 5 November 2024, and at or below my bull on 1 May 2025.¹ I weight the cases 25%, 55% and 20%, which gives $102.

At $213.56, the price is 108% above my base and 43% above my bull. My base cash flows return 1.0% a year at that price, my bull 5.3%, against a 4.90% Treasury. By this measure the price is not a close call. Quality and price are separate questions. This is a very good business, with margins that few engine suppliers have ever had. On my numbers it is also a poor purchase at $213.56, because the best I can model leaves the shares short of the price. I may be wrong on the discount rate or the length of the cycle. The market says so with some force.

VIIThe case for the price

What most people miss

Three things cut in the company’s favour and are easy to overlook. First, gas turbines are a smaller part of this story than the share price suggests. They were 13% of third-quarter revenue.³ Commercial aerospace was 54%, so the engine cycle matters more than the turbine boom. Second, spares have risen from about 11% of revenue in 2020 to over 20% in the 2026 plan, and spares are the part of an engine business that is sold into engines already flying.⁶ That is a more stable base than new builds. And third, the profit growth is partly the company’s own pricing: the 10-Q says price increases are above material and inflation pass-through.⁴ That is the unusual line. Most suppliers recover cost; this one is gaining on it.

The bull case

In plain words: the engines in this decade’s aircraft and power plants all need Howmet’s parts, the world is short of both aircraft and electricity, and Howmet has pricing power and the capacity to grow. Management makes this case itself. In the third-quarter release of 29 October 2026, John Plant is quoted as saying that third-quarter results were above the high end of guidance, that growth of 29% was the strongest in the company’s record, that demand in gas turbines was strengthening beyond 2028, that defense needs more spares, and that the company expected about $11.5B of revenue in 2027, up about 12%.³ The release adds that the company does not expect spares demand to be materially affected by the Middle East conflict because of the backlog of engine shop visits.³ The board repeated the point in the proxy when it gave him $45M to stay to 2028.⁸ The company’s largest holders at the proxy date were BlackRock, 8.9%, and JPMorgan, 7.7%, according to filings reviewed there.⁸ That does not say what either thinks of the price. Everything attributed to management above comes from the written release. I did not find an official call transcript or a sell-side report I could open, so I quote no one from the call and leave analysts out.

Against reality

Today’s numbers support the near part. Third-quarter sales were up 29% and free cash flow for the year is guided to about $2.0B, $100M more than in July.³¹⁵ If aircraft output rises as the industry data suggest, if gas turbine sales double, and if price keeps beating cost, then earnings per share of $9.28 in 2030 are possible, which is my base. Nothing in the filings argues with the next two years.

The price asks for more. It is 108% above my base and 43% above my bull. To justify it, revenue must reach about $44B by 2036, or the stock must still trade at about 34 times earnings at the end of 2030. It helps to multiply it out. Say aircraft output rises as planned through 2030, 60%. Gas turbine sales double and then keep growing, 50%. Price stays above cost, margin holds at 34% or more, 50%. No recession hits before 2031, 65%. The multiple stays above 30 times at the end, 40%. Those are my guesses and they are not independent, since a strong market helps all of them. Multiplied, they give 4% E (estimate). Allowing for the overlap, perhaps 10%. I give the bull 20%, but the bull itself is below the price: it returns only 5.3% a year at this price on my cash flows, close to a Treasury. Each step looks reasonable. All five together do not.

Why the market could be right. Three things would make my base too low. First, sole-source positions. If Howmet is the only qualified source for many parts on engines that fly for thirty years, price rises can last and margin could stay near my bull, 37.5%. I found no filing that lists them, so this is a judgement I cannot check. Second, the aircraft cycle. My base has no recession in ten years, and my bull runs the upcycle into the 2030s. Third, pricing: the 10-Q says price increases are above cost pass-through, and spares are over a fifth of revenue.⁴⁶ If all three hold, my bull of $150 is the fair centre of the range, and a 20 times exit on it gives $231 E (estimate). That is the argument the price is making. It needs all three, for a decade.

What a 10x would take. Ten times $213.56 is $2,136, about $852B of market value. At 25 times earnings that needs about $34B of net income, about 15 times the roughly $2.2B of adjusted net income in the 2026 guide. At a 20% net margin it needs about $170B of revenue, more than the $88.6B RTX made in 2025, which my RTX page covers. By the end of 2036 the price would have to compound at 23% a year. The stock has risen about 16 times since 1 April 2020, but that began at a market value of $5.75B.⁸¹ From a size like today’s, the one case I can point to is NVIDIA, which I cover on its own page, and it did it with software-like margins. A maker of castings and fasteners has factories, certification and margins already in the 30s. It is close to impossible, and I would not build a case on it.

Where I come down

The margin and the pricing line moved me: without them my settled margin would be several points lower. The headline growth did not, since a base of $10B of sales is easier to grow when it starts from a trough in 2021. Evidence that spares can stay above 20% of revenue through a lull in new builds would raise my values most, and a gas turbine contract of several years with a stated price would be the first sign. I would also move up on proof that the sole-source share of parts is high, which is the input I cannot see.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

• Customer power. GE Aerospace and RTX are about 25% of sales and the 10-K says the loss of a significant customer could be material.⁴⁷ Several customers have their own foundries.
• New entrants. A report in September that SpaceX and Tesla might make turbine blades cut the stock about 21%.¹⁰ I could not trace the report to a primary document. Certified blades are a long way off for any newcomer.
• Raw materials and suppliers. The 10-K names nickel, cobalt, titanium sponge and energy, and says some suppliers are limited-source or sole-source, such as for titanium sponge.⁷ Tariffs and pass-through can lag.⁴
• Execution. The company is hiring about 1,240 people in nine months, adding Engine Products capacity, and integrating CAM.⁵⁴ A quality escape in a certified part would hit the margin and the customer relationship.
• Leadership. Plant is 72, the finance chief joined last December, and the chief legal officer resigned in September 2025.⁷
• Grenfell. Arconic Corporation indemnifies Howmet for the 2017 London fire. Howmet was joined to the council’s claim in June 2024 and trial is expected between October 2028 and July 2029.⁴ The indemnity depends on Arconic Corporation’s ability to pay.
• Labor. About 26% of US employees are union. The UAW contract at Whitehall, Michigan, covering 1,865 people, expires in April 2028; the next significant plant contract expires in 2027.⁷
• Middle East and energy. The company says it expects no material effect on spares from the conflict, but energy prices are a stated risk to aerospace demand and to its own costs.³⁴
• The stock itself. It fell 33% from 18 August to 28 October and is 27% below that high now. At 39 times earnings, either direction can be violent.¹