Howmet Aerospace (HWM) shares rallied sharply on Thursday after the company delivered first-quarter results that surpassed Wall Street expectations and boosted its 2026 revenue forecast, fueled by surging demand from commercial aviation, defense programs, and gas turbine markets.
The Pittsburgh-based aerospace supplier posted a 19% increase in quarterly revenue to $2.31 billion, while adjusted earnings per share rose 42% to $1.22, both comfortably above analyst estimates compiled by LSEG. The company's performance underscores the continued strength in aircraft production and aftermarket parts demand, even as supply chain challenges and geopolitical uncertainties persist.
Strong Demand Across Key Segments
Howmet's largest business unit, Engine Products, saw third-party sales climb 29% to $1.25 billion, reflecting robust demand for engine components and spares. Fastening Systems revenue grew 14% to $471 million, while Forged Wheels revenue increased 17% despite a 11% drop in commercial transportation volumes. The company noted that Engineered Structures revenue declined 3% as it continues to streamline that product line.
Commercial aerospace sales jumped 20%, defense aerospace rose 10%, and gas turbine sales surged 39% year-over-year, highlighting the breadth of demand across Howmet's end markets. Chief Executive John Plant described the quarter as "strong," noting that revenue, adjusted EBITDA, and adjusted EPS all exceeded the upper end of the company's guidance range.
Raised 2026 Guidance
Howmet now expects 2026 revenue in the range of $9.575 billion to $9.725 billion, raising the midpoint by $550 million from its previous forecast. The company projects full-year adjusted EPS of $4.88 to $5.00. For the second quarter, management guided for adjusted EPS of $1.22 to $1.24 on revenue of $2.39 billion to $2.41 billion.
The improved outlook reflects recent portfolio moves, including the completion of the $1.8 billion acquisition of Consolidated Aerospace Manufacturing on April 6, the purchase of Brunner Manufacturing for approximately $120 million in February, and the sale of its disk forging plant in Savannah, Georgia, for about $230 million in March. According to the company, these transactions collectively add roughly $275 million in net revenue to the 2026 guidance. EPS will be slightly diluted this year but is expected to become accretive in 2027.
Market Context and Risks
Investors have been closely watching aerospace suppliers for signs they can capitalize on production increases from Boeing and Airbus, even as supply chains remain tight and geopolitical tensions disrupt operations. Conflicts in Ukraine and Iran have been depleting missile reserves, boosting defense budgets and demand for aerospace components. However, Plant warned that "an effect could be felt from the Iranian conflict" and cited "ongoing uncertainty" related to Iran in the company's forward-looking statements.
Other risks include energy costs, shifting trade policy, supply chain disruptions, manufacturing setbacks, acquisition integration challenges, and the possibility that demand could outpace the company's ability to deliver. Howmet also noted it is not yet ready to call a rebound in commercial transportation, even as demand begins to pick up.
Strong Cash Flow and Share Repurchases
Free cash flow surged to $359 million in the first quarter, up from $134 million a year earlier. The company bought back $300 million of its own shares during the quarter and an additional $150 million in April. As of May 4, approximately $1.05 billion remained available under the current buyback program.
Stock Performance
Howmet shares closed up 7.7% at $276.16, reaching an intraday high of $290. The stock's strong performance outpaced its aerospace and defense peers, with TransDigm adding about 2.2%, GE Aerospace barely moving, and RTX slipping 1.0% during Thursday's session.
