Howmet Aerospace cleared first-quarter earnings estimates early Thursday and raised its full-year outlook, assuaging concerns over Trump tariffs. HWM stock, among the top S&P 500 performers in morning stock market action, flew past a buy point.
The company supplies aircraft parts, including engine turbine blades, for both new commercial jets, and those already in service, as well as for military aircraft.
Howmet Earnings
Howmet posted Q1 adjusted earnings per share of 86 cents, up 51% from a year ago and nine cents above estimates. Revenue grew 6.5% to $1.94 billion, in line with forecasts. Howmet said that adjusted operating income margin rose 500 basis points from a year ago to 25.3%.
"Margin progression within the Fastening Systems and Engineered Structures segments was particularly noteworthy," Plant said.
For the full year, Howmet now expects adjusted earnings per share of $3.36 to $3.44, up from its Feb. 13 outlook of $3.13 to $3.21. The improvement relates to higher margins, not revenue. The range of sales was widened to $7.88 billion to $8.18 billion from a prior outlook of $7.93 billion to $8.13 billion.
Howmet Addresses Trump Tariffs Impact
"There has been some recent moderation in North American (commercial airline) traffic growth, driven by tariff-related and economic uncertainty," Howmet CEO John Plant said in the earnings statement. "Nevertheless, Howmet Aerospace's engine and airframe OEM customers continue to demonstrate growth, with record backlogs supported by under"-build of aircraft in recent years and the desire for new, fuel-efficient aircraft.
Howmet's aftermarket sales have surged in recent years, as turmoil at Boeing depressed production of new planes.
The company also noted "healthy growth" in the defense aerospace market and demand for its engine turbine blades being fueled by data center expansion.
"While the tariff situation remains fluid, we expect to pass on tariff-related costs to our customers."
On a less positive note, the company said its exposure to commercial transportation will be a headwind as tariffs, uncertainty and other factors hold back an expected increase in truck builds.
HWM Leads S&P 500
HWM stock jumped more than 7% on Thursday morning, among the top 10 performers in the S&P 500. Meanwhile, the S&P 500 gained 1.4% on a slew of strong earnings reports.
Howmet rose 0.8% to 138.58 on Wednesday, closing just above a 138.06 buy point from a double-bottom base, according to a MarketSurge analysis. Thursday's move carried HWM through the buy zone, which runs to 144.96.
Even before its breakout, Howmet's relative strength line, the blue line in IBD charts that tracks a stock's progress vs. the S&P 500, was already hitting new highs, reflecting its market leadership.
Howmet has a 5.3% 21-day average true range. There are exceptions, but given current market conditions, IBD generally suggests investors keep most of their portfolio focused on stocks with ATRs at or below 6%.
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