Howmet Aerospace is Friday's IBD Stock Of The Day. The S&P 500 member has flashed an early buy signal as it works toward a buy point and aerospace and defense stocks power higher in 2025.
Pittsburgh-based Howmet supplies aircraft parts, including engine turbine blades, for both new commercial jets and those already in service, as well as for military aircraft such as the F-35. The company's clients include manufacturing giants like GE Aerospace, Boeing, Airbus, Lockheed Martin and RTX's Pratt & Whitney division.
Defense contractors have trended up this year, driven by proposed increases to the U.S. defense budget, greater spending commitments from NATO, and ongoing conflicts in the Middle East and Europe. Civilian aircraft demand also is solid.
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Meanwhile, Howmet has cleared earnings and revenue estimates the past three quarters. For its most recent Q2 report on July 31, Howmet delivered a 31% increase in earnings to 91 cents per share adjusted, on 9% revenue growth to a record $2.05 billion.
The company's commercial aerospace market grew 8%. Its defense aerospace market grew 21%. Industrials and other market sales increased 17%. The gains were partially offset by a 4% decline in commercial transportation.
Engine products revenue grew 13% to about $1.06 billion, while fastening systems sales rose 9% to $431 million. Engineered structures revenue climbed 5%, while forged wheels sales declined 1% compared to last year.
Further Growth Ahead
CEO John Plant in the release said that the "commercial aerospace market should continue to grow, driven by healthy passenger traffic, extraordinarily high (original equipment manufacturing) backlogs and desire for new, fuel-efficient aircraft." Plant added that the defense aerospace market strength should carry through 2025, while booming data center expansions should maintain strong demand for industrial gas turbines for the rest of the year.
"The overall picture appears healthy," Plant said.
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Howmet raised its 2025 guidance with the Q2 results. The company lifted its revenue outlook by $100 million, to range from $8.08 billion to $8.18 billion in sales. Howmet hiked its earnings forecast by 20 cents, to range from $3.56 to $3.64 per share.
FactSet analysts now expect earnings of $3.63 per share on $8.15 billion in sales for the year.
Howmet Stock
HWM stock is climbing up the right side of a shallow cup base with a 193.26 buy point. The entry matches Howmet's record high from July 30.
The buy zone, which extends 5% beyond the buy point, stretches to 202.92.
HWM stock tumbled July 31 following Q2 results and trended lower for three weeks.
Shares reclaimed their 50-day line on Wednesday and have kept climbing. That's still offering an early entry from the 50-day now.
Howmet Aerospace has rallied nearly 70% this year, making it the 12th best performer in the S&P 500. Meanwhile, the Aerospace/Defense group has jumped about 26%.
The Aerospace/Defense group ranks a strong 29 out of the 197 industry groups tracked by IBD.
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