Overview
Since the Report − 34.6%
Revenue grew 24.0% year over year, EPS beat the estimate by 6.0%; the stock rose 3.4% in its first reaction.
- RevenueQ2
- $2.55B
- ▲ 24% YoY
- EPSAdjusted
- $1.33
- ▲ 46% · Above Expectations
Verdict
BUYHowmet closed the quarter above the high end of its own guidance and lifted the full-year revenue target by roughly $400 million. The stock set a record, yet the price already appears to embed most of that optimism. What comes next depends on whether guidance can be raised again.
Close on Report DayAug 6
$301.39▲ 3.4%Report-Day Move
- Market Cap(Today)
- ≈ $78.6 B
- 1Y Return(At Report)
- + 67%
- P/E(At Today's Price · $4.55 · Trailing 12M)
- 43.3
- PEG(Company Guidance 2026)
- 1.09
- Net Margin(Trailing 12M)
- 20.5%
Earnings Summary
In 30 Seconds- Revenue rose 24% year over year to $2.55B, beating estimates by 5%; adjusted EPS of $1.33 came in 6% above expectations.
- Full-year revenue guidance moved up from about $9.65B to $10.0-10.1B, and Engine Products margin reached 37.7%.
- The stock rose 3.4% to close at $301.39 on report day; the move was modest because the price already reflected much of the optimism.
The Numbers
Adjusted EBITDA Margin
32.1%
▲ 340 Bps
Engine Products Revenue
$1.37B
▲ 32% · 37.7% Margin
Free Cash Flow
$479M
▲ 39%
Full-Year Revenue Guidance
~$10.05B
Raised From $9.65B
Quarterly Revenue ($ Billion)
2.05
Q2 25 · $2.05 B
2.09
Q3 25 · $2.09 B · QoQ + 1.8%
2.17
Q4 25 · $2.17 B · QoQ + 3.8%
2.31
Q1 26 · $2.31 B · QoQ + 6.7%
2.55
Q2 26 · $2.55 B · QoQ + 10.1% · YoY + 24.1%
2.565–2.585
Q3 26E · 2.565–2.585 · QoQ + 1.1% · YoY + 23.3%
- Q2 25
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26E
Q3 2026 Company Guidance
- Q3 Revenue2.565 – 2.585 billion2.565 billion2.585 billion2.565 – 2.585 billion
Midpoint 2.575 · Market Expectation 2.48Even Low End 3.4% Above Estimate ▲
- Q3 Adjusted EPS1.34 – 1.36 $1.34 $1.36 $1.34 – 1.36 $
Midpoint 1.35 · Market Expectation 1.26Even Low End 6.3% Above Estimate ▲
- Q3 Adjusted EBITDA Margin32.2% – 32.3%32.2%32.3%32.2% – 32.3%
32.1% Delivered in Q2Slightly Above · 0.2 pt Expansion ▲
- Full-Year Revenue10.0 – 10.1 billion10.0 billion10.1 billion10.0 – 10.1 billion
Midpoint 10.05 · Prior Target ~9.65Raised by $400M ▲
- Full-Year Adjusted EBITDA3.21 – 3.25 billion3.21 billion3.25 billion3.21 – 3.25 billion
Midpoint 3.23 · Market Expectation 3.12Even Low End 2.9% Above Estimate ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±7.7% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Engine Products$1.37 BShare 53.9%▲ 32.3% YoY
- Fastening Systems$589 MShare 23.1%▲ 36.7% YoY
- Forged Wheels$316 MShare 12.4%▲ 14.5% YoY
- Engineered Structures$269 MShare 10.6%▼ 12.7% YoY
Key Metrics
Free Cash Flow
$479 M
▲ 39.2% YoYPress Release
Cash From Operations
$583 M
▲ 30.7% YoYPress Release
Capital Expenditures
$104 M
Press Release
Share Repurchases
$300 M
Press Release
Engine Products Adj. EBITDA Margin
37.7%
Press Release
Fastening Systems Adj. EBITDA Margin
30.1%
Press Release
Shares are computed over the segment total: $2.55 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Looking ahead, Howmet is well positioned, with all our major markets in growth mode. More robust build rates for commercial aircraft are supported by record backlogs, while engine spares needs continue to increase.”
- Extraordinary Gas Turbine Demand
- Higher 2027 Capital Spending
- Dividend Raised 17%
Summary and Review
Summary
Howmet Aerospace posted $2.55 billion of second-quarter revenue. Growth was 24%, or 21% excluding the acquisition, roughly 5% above the $2.43 billion Market Expectation. Adjusted EPS of $1.33 rose 46%, about 6% ahead of expectations. More striking: adjusted EBITDA reached $817 million and the margin hit 32.1%, a 340 basis point expansion in a year. Net income was $534 million; free cash flow rose 39% to $479 million. All of these beat the high end of the company's own guidance.
The stock closed up 3.4% at $301.39 and hit a record $310 intraday. The driver was the guidance raise, not the quarter itself. Full-year revenue guidance rose from roughly $9.65 billion to $10.05 billion. Adjusted EPS went from $4.94 to $5.27, free cash flow from $1.75 billion to $1.90 billion. Yet a 3% pop is telling: up roughly 67% in a year and at a price-to-earnings ratio near 67, the shares already discount much of the future margin.
Our read on the quarter is positive; the score is 87. Revenue, margin, cash and guidance all improved at once. Growth is not tied to one programme: commercial aerospace grew 28%, gas turbines 38%, defense 11%. The reservation is the price, not the story. The average analyst target sits barely above the close, capital spending rises in 2027, and Engineered Structures keeps shrinking. This assesses the quarter, not the stock. See our valuation guide to refresh the logic.
Full Review
Engine Products carries the company almost single-handedly.
Engine Products generated $1.37 billion of revenue in the quarter, up 32% year over year. That single segment is roughly 54% of total revenue, which means anyone looking at Howmet is largely looking at jet engine castings. Segment adjusted EBITDA rose to $517 million, a 51% jump that far outpaced revenue growth. The margin reached 37.7% after expanding 470 basis points in a year, the highest and fastest-improving of the four segments. The driver is mix. Spares for engines already in service are taking a larger share versus parts for new engine builds, and those spares are meaningfully more profitable. As CEO John Plant put it, engine spares needs continue to increase. The more hours the global fleet flies, the tighter the maintenance cycle gets, and that is a multi-year trend rather than a one-quarter swing.
Turbines and aerospace are growing at the same time.
Gas turbines remind investors Howmet is not purely an aircraft company. That end market grew 38%, outpacing even commercial aerospace. The demand comes from power generation: as data centres and AI infrastructure push grid operators to add capacity, the need for hot-section turbine components climbs. Management calls demand extraordinary; customers are already raising their outlooks. It grows independently of aircraft build rates yet shares the same alloys, plants and margin structure. Commercial aerospace revenue rose 28% year over year. Behind it are the long-delayed rate increases at Boeing and Airbus, backed by record backlogs. Near the front of the supply chain, Howmet feels every rate increase months before delivery. Defense grew a measured 11%; management cites missiles, drones and collaborative combat aircraft as medium-term drivers. The risk lives there too: a step back in Boeing's or Airbus's production plan reaches Howmet's order book a couple of quarters later.
Guidance goes up and cash goes back to shareholders.
The full-year outlook given in May was $9,575–9,725 million of revenue and $4.88–5.00 of adjusted earnings per share. With these results the target moves to $10.0–10.1 billion of revenue and $5.23–5.31 of EPS — roughly $400 million more revenue and about 7% more profit. The free cash flow target rises to $1.85–1.95 billion. Third-quarter guidance calls for $2.565–2.585 billion of revenue and $1.34–1.36 of adjusted EPS, so management is signalling the momentum continues. On capital allocation, the company repurchased $300 million of stock in the quarter and $800 million year to date through July. It also repaid a $186 million yen-denominated term loan and raised the quarterly dividend 17% to $0.14 per share. The $1.8 billion CAM acquisition completed in early April is described as integrating on track, with leverage expected to return to pre-deal levels in short order.
Engineered Structures shrank, but by design.
Engineered Structures revenue fell 13% to $269 million — the only contraction among the four segments. The cause is not soft demand: the company divested its Savannah disk forging facility and is rationalising lower-margin products out of the portfolio. Despite the smaller top line, the segment margin expanded 170 basis points to 23.8%, which suggests the pruning is doing its job. Forged Wheels grew 14% to $316 million at a 27.8% margin. Tied to the heavy commercial truck market, it follows a different cycle from aerospace and is the piece most exposed to an economic slowdown. Fastening Systems jumped 37% to $589 million, though a significant share of that comes from the CAM acquisition — separating organic growth will take another quarter or two of reporting.
The real debate is about price, not the print.
The shares are up roughly 67% over the past year and set a record at $310 on results day. At that level the price-to-earnings ratio is 65–70, rich for most of the aerospace supply chain. Targets rose after the print: JPMorgan to $310 from $265, TD Cowen to $320 from $300, BTIG to $300 from $275. Yet across data providers the average target from 22 analysts ranges between $300 and $313, leaving single-digit upside versus the close. The sources conflict on the exact figure; clearly the stock now trades at the low end of the average target. That does not make the quarter a bad one; it means everything the company does right is already in the price. What comes next depends on whether guidance can be raised again. Next quarter's line to watch: do results clear the top of the $2.565–2.585 billion revenue and $1.34–1.36 EPS ranges.
Looking Ahead
Strengths and Risks
6 Strengths · 6 RisksStrengths
6- Revenue, adjusted EBITDA, margin and earnings per share all came in above the high end of the company's own guidance.
- Adjusted EBITDA margin of 32.1% expanded 340 basis points in a year — growth is enhancing profitability, not diluting it.
- Engine Products grew revenue 32% while lifting EBITDA 51% and the margin to 37.7%The spares mix is doing the work.
- Three end markets are growing at once — commercial aerospace 28%, gas turbines 38%, defense 11% — so revenue is not tied to one programme.
- Full-year revenue guidance rose about $400 million, EPS about 7%, and free cash flow about $150 million.
- The dividend was raised 17%, $800 million of stock was repurchased through July, and a $186 million loan was repaid.
Risks
6- The price-to-earnings ratio sits in the 65–70 rangeMost of the good news is already reflected in the shares.
- The average analyst target is only marginally above the close, ranging from $300 to $313 depending on the data provider.
- More than half of the growth comes from Engine ProductsAny slowdown there would pull the whole company down quickly.
- A step back in Boeing's or Airbus's production rate plan would hit Howmet's order book with a lag of a few quarters.
- Capital spending is rising and management says it will rise further in 2027, which could weigh on free cash flow.
- Forged Wheels is tied to the heavy commercial truck market and is the most cyclical pieceEngineered Structures keeps shrinking.
What to Watch
6- August 7, 2026 is the record date for the increased dividend; the $0.14 per share payment goes out on August 25, 2026.
- Q3 guidance is $2.565–2.585 billion of revenue and $1.34–1.36 of adjusted EPS; results are due around early November 2026.
- Full-year targets to track: $10.0–10.1 billion of revenue, $5.23–5.31 of EPS and $1.85–1.95 billion of free cash flow.
- Integration of the $1.8 billion CAM acquisition completed in early April, and the return of leverage to pre-deal levels.
- The 2027 capital spending planManagement has flagged an increase, with the figure expected to firm up later this year.
- Boeing and Airbus monthly build rates plus the flow of engine spares orders will set the direction of the next quarter.
Upcoming Earnings
To Understand This