Aerospace upcycle, now with a power tailwind
- Aerospace is the center of the company, driving the vast majority of revenue across commercial and defense markets.
- Engine Products led Q2 2026, with $1.37 billion of sales, 32% growth, and a 37.7% adjusted EBITDA margin.
- Industrial gas turbine revenue rose 38% in the second quarter, helped by electricity demand tied to data centers.
- Forged Wheels volumes rose 7% sequentially from the first quarter, showing a potential bottom in the truck market.
- The stock story is strong, but the valuation score is fair, so the price already reflects a lot of good news.
Jet engines drive the story
Howmet is a high-end parts maker for planes, jet engines, industrial gas turbines, and heavy trucks. The current thesis is simple: aerospace demand is strong, and Howmet is turning that demand into higher margins.
Q2 2026 made the bull case stronger. Engine Products grew sales 32% year over year and reached a 37.7% adjusted EBITDA margin, a profit margin before interest, taxes, depreciation, and amortization. Fastening Systems also grew rapidly.
A major tailwind is power demand. Industrial gas turbine revenue rose 38% year over year, helped by electricity needs from data centers. Management pointed to more than 50% global market share in turbine blades, which gives Howmet a strong seat in that market. This requires more capital spending through 2027 to meet demand.
The pushback is price and cycle risk. Finn's performance and financial health scores are strong, but valuation is weaker. If Boeing or Airbus production stumbles, if truck demand softens again, or if capital spending weighs too heavily on cash flow, the stock could have less room for error.
Critical parts, hard to copy
Howmet makes parts that must work under heat, stress, and tight safety rules. Its products include airfoils for jet engines, rolled rings, aerospace fasteners, airframe parts, titanium products, and forged aluminum wheels.
The company earns money by selling these parts to large aerospace, defense, industrial, and transportation customers. Its biggest advantage is manufacturing know-how. Customers do not switch suppliers quickly when a part is tied to aircraft safety, engine performance, and long approval cycles.
That also creates the main weak spot. Howmet depends on customer build rates, especially aircraft and engine production. When Boeing, Airbus, GE Aerospace, RTX, or other major customers slow down, Howmet can feel it.
Management is also shaping the portfolio. In Engineered Structures, it sold a disk forging facility and is cutting lower-value work. That can hurt reported sales, but the goal is better profit quality.
Four ways Howmet sells precision
Engine Products
This segment makes airfoils, investment castings, and rolled rings for aircraft engines and industrial gas turbines. It is the largest segment and had the strongest Q2 2026 growth and margin.
Fastening Systems
This unit makes rivets, bolts, installation tools, and other fasteners used in aircraft, engines, and transportation equipment. The CAM acquisition adds scale here, but integration is a key watch item.
Engineered Structures
This segment makes titanium products, forgings, extrusions, and machined components for airframes, wings, and landing gear. Sales fell slightly as Howmet prunes products and plants.
Forged Wheels
This business sells forged aluminum wheels for trucks, buses, and trailers under the Alcoa Wheels brand. It is profitable, and sequential volume growth suggests the commercial transportation cycle is bottoming.
Industrial gas turbine blades
These blades serve power turbines, not only aircraft engines. Management noted a global market share above 50% here, supported by data center electricity demand.
Sales mix
Segment shares reflect the relative size of the four main business units, led by Engine Products. Aerospace and defense demand remain the main swing factors.
What could break the thesis
Boeing or Airbus build-rate slips
High impact · Medium oddsHowmet's aerospace growth depends on aircraft and engine production. If major aircraft makers miss rate plans, Howmet may lose volume and operating leverage.
Capital spending intensity
Medium impact · Medium oddsMeeting the surging industrial gas turbine and aerospace demand requires significant capital investment. Capital expenditures will exceed $500 million in 2026 and step up further in 2027, temporarily weighing on free cash flow.
CAM integration costs
Medium impact · Medium oddsHowmet closed the $1.8 billion CAM acquisition in April 2026. It temporarily dilutes the Fastening Systems margin profile until synergies are realized in 2027. If integration costs run high, margin gains could slow.
Raw material or plant disruption
High impact · Low oddsHowmet uses titanium, nickel superalloys, aluminum, and other specialized materials. A supply disruption or major plant issue could stop shipments to customers that need certified parts on time.
In one breath
What does Howmet Aerospace actually make?
Howmet makes high-performance metal parts for aircraft engines, airframes, industrial gas turbines, and heavy trucks. Its products include airfoils, rolled rings, fasteners, titanium parts, and forged aluminum wheels.
Why does data center power demand matter for Howmet?
Data centers need more electricity, and some of that demand supports industrial gas turbines. Howmet makes turbine blades and management pointed to more than 50% global market share in that product area.
Is Howmet mainly an aerospace company?
Yes. Aerospace, including commercial and defense, makes up the majority of revenue. The rest includes commercial transportation, industrial, and other markets.
What is the biggest risk for HWM stock?
The biggest business risk is a slowdown in aircraft and engine production, especially from major customers and programs. The biggest stock risk is valuation, because strong performance is already reflected in the price.
