Howmet Aerospace Inc. HWM currently boasts strong prospects on business strength, solid product portfolio, healthy liquidity position and a sound capital-deployment strategy.
The currently Zacks Rank #2 (Buy) player has a market capitalization of $13.3 billion.
Let’s delve into the factors that make investment in the company a smart choice at the moment.
Business Strength: In the quarters ahead, Howmet is poised to gain from its presence in the diverse end markets, including commercial transportation, general industrial, defense aerospace and commercial aerospace, among others. In the first quarter of 2022, HWM’s revenues from commercial transportation and commercial aerospace grew 10% and 29% year over year, respectively. Strength in the Industrial Gas Turbine end market will likely benefit the company’s Engine Products segment and strong momentum in its commercial transportation end market is anticipated to boost its Fastening Systems and Forged Wheels segments over time. HWM’s second-quarter revenues are projected in the range of $1.35-$1.39 billion.
Key Initiatives: Howmet’s solid product portfolio, effective pricing and cost-reduction efforts are worth mentioning. It anticipates earnings (excluding special items) of $1.33-$1.45, with the mid-point at $1.39 for 2022. The midpoint is above $1.01 recorded in 2021. Also, HWM expects second-quarter earnings in the range of 31-33 cents per share.
Solid Liquidity Position: Howmet’s healthy cash position is anticipated to be advantageous in the quarters ahead. HWM had an available cash balance of $522 million and a revolving credit facility of $1 billion (set to mature in September 2026), while exiting first-quarter 2022. For 2022, HWM predicts an adjusted free cash flow of $575-$675 million with the midpoint being $625 million.
Rewards to Shareholders: HWM remains committed toward rewarding its shareholders through dividend payouts and share-repurchase programs. In the first three months of 2022, Howmet paid out dividends worth $9 million and repurchased shares worth $175 million. Also, 3 million shares were repurchased for $100 million in January 2022.
Howmet Aerospace Inc. Price and Consensus
Northbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for 2022 earnings has been revised 2.2% upward.
Zacks Rank & Other Stocks to Consider
Two more top-ranked companies from the Construction sector are discussed below:
Quanex Building Products Corporation NX presently has a Zacks Rank #1 (Strong Buy). NX delivered a trailing four-quarter earnings surprise of 30.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
NX’s earnings estimates have increased 21.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have rallied 11.7% in the past three months.
Janus International Group, Inc. JBI presently has a Zacks Rank of 2. JBI’s earnings surprise in the last four quarters was 53.2%, on average.
In the past 60 days, the stock’s earnings estimates have increased 18.5% for 2022. The stock has increased 3.2% in the past three months.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.