Can Howmet Sustain EBITDA Margin Momentum Amid Cost Pressures?
Howmet Aerospace Inc. HWM achieved a solid adjusted EBITDA of $817 million in the second quarter of 2026, which surged 39% year over year. The company's adjusted EBITDA margin reached 32.1%, reflecting an increase of 340 basis points (bps). The adjusted operating margin also improved 350 bps to 28.8%.
Despite the rise in operating expenses, the improved margin performance reflects the benefits of strong top-line growth, operational leverage and productivity gains. It’s worth noting that Howmet reported revenues of $2.55 billion in second-quarter 2026, which increased 24% year over year. The revenues were driven by persistent strength across commercial aerospace, defense aerospace and gas turbine markets.
Solid demand across end markets, robust backlog level and expected synergies from the Consolidated Aerospace Manufacturing (CAM) buyout are expected to drive its top-line and margin performance. For 2026, Howmet raised its revenue outlook from $9.575-$9.725 billion to $10.00-$10.10 billion.
For the year, HWM expects adjusted EBITDA of $3.21-$3.25 billion, with margin projected in the range of 32.1-32.2%. The projected adjusted EBITDA margin indicates a year-over-year expansion of 280 bps at the midpoint. Also, for the third quarter of 2026, adjusted EBITDA is expected in the range of $825-$835 million, with a margin of 32.2-32.3%.
Peer’s Margin Performance
Textron Inc.’s TXT cost of sales rose 4.2% year over year to $3.09 billion in second-quarter 2026. Textron’s gross profit margin declined 100 bps to 17.8% in the quarter. The decline in Textron’s margin was due to reduced margin in the Bell segment.
RTX Corporation’s RTX total costs and expenses increased 12.8% year over year to $22 billion in second-quarter 2026. Despite the rise in costs, RTX Corp.’s adjusted operating profit margin expanded 150 basis points (bps) to 11.4% in the quarter. RTX is benefiting from rising aerospace deliveries, growing aftermarket revenues and declining geared turbofan (GTF) engine-related cash costs.
HWM's Price Performance, Valuation and Estimates
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Shares of Howmet have gained 18% in the past year against the industry’s decline of 20.6%.
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From a valuation standpoint, HWM is trading at a forward price-to-earnings ratio of 36.29X, above the industry’s average of 27.69X. Howmet carries a Value Score of D.
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The Zacks Consensus Estimate for 2026 and 2027 earnings has increased 3.7% and 6.3%, respectively, over the past 60 days.
The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
