Howmet Aerospace: I Was Wrong, But The Stock Remains Expensive

Dhierin BechaiInvesting Group LeaderFollow5ShareSavePlay(10min)CommentsSummaryHowmet Aerospace delivered strong Q4 results, with 15% revenue growth and 29% EBITDA growth, but remains fairly valued after a 24% stock surge.HWM's premium valuation—29.1x EV/EBITDA—reflects broad-based demand, but near-term upside is limited unless operating leverage and double-digit growth materialize.Guidance for 2024 includes $9.1B sales, 30.1–30.5% margins, and $1.6B free cash flow, with incremental upside from the CAM acquisition if capital intensity remains low.I upgrade HWM to hold from sell, recognizing impressive execution but seeing little attractive upside at current prices. Consolidation appears warranted.Looking for a helping hand in the market? Members of The Aerospace Forum get exclusive ideas and guidance to navigate any climate. Learn More » pablorebo1984/iStock Editorial via Getty Images Howmet Aerospace (NYSE:HWM), a key supplier to the aerospace and defense industry, surged 24% since my last sell-rated report outperforming the flat S&P 500. The sell rating has obviously not worked out, and with that in mind, I'm reviewing the valuationThis article was written byDhierin Bechai22.91K FollowersFollowDhierin-Perkash Bechai is an aerospace, defense and airline analyst. Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.