Howmet Aerospace Inc. (NYSE:HWM) has experienced considerable volatility in 2026, retreating sharply from its August highs. Despite the pullback, the stock remains up approximately 4% year-to-date, better than the 9% loss of the broader sector, affirming why it is one of the best aerospace dividend stocks to buy.
Underlying Growth
Relative strength against the broader aerospace sector reflects robust demand for the company’s components and defense aerospace products. In the second quarter, revenue increased 24% year over year to $2.55 billion, while adjusted earnings per share surged 46% to $1.33. Free cash flow also climbed 39% to $479 million.
These results demonstrate that Howmet is increasing sales while improving profitability. Adjusted EBITDA grew faster than revenue at 39%, indicating improved operating leverage, a stronger product mix, and productivity benefits.
Following the impressive first-half performance, management raised full-year guidance and now expects revenue to range between $10 billion and $10.1 billion, with free cash flow between $1.85 billion and $1.95 billion. Adjusted earnings per share are expected to range between $5.23 and $5.31.
Howmet’s strong results also highlight its importance to the broader aerospace supply chain, where demand for specialized components and advanced manufacturing capabilities continues to grow. For a closer look at its strategic role in the industry, read Howmet Aerospace (HWM): A Critical Aerospace Supply Chain Play.
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Valued for Growth
While Howmet Aerospace Inc. is a high-quality aerospace supplier, its share price reflects substantial expectations for future growth. Trading at a trailing price-to-earnings multiple of 49x, the stock is not cheap given the sector average P/E of 20x.
As it stands, the stock is priced on expectations that the company will continue to deliver above-average growth, as it did in the second quarter. In return, a slowdown in aircraft production or margin contraction could cause investors to re-rate the stock.
A price-to-sales multiple of 10.13x against the sector average of 1.77x further affirms the premium valuation in play. Consequently, revenue growth must translate to durable earnings growth and free cash flow to support the high multiple.
Additionally, Howmet’s enterprise value-to-EBITDA multiple stands at 34, well above its 10-year median, suggesting the stock is expensive relative to its historical average.
Analysts Expectations
Despite the premium valuation, Wall Street analysts remain positive about the stock’s long-term outlook. According to Citi, Howmet Aerospace Inc. presents a compelling risk-reward investment after the recent pullback.
Consequently, it maintains a buy rating and a $329 price target. Guggenheim analyst Michael Ciarmoli initiated coverage with a Buy rating and a $350 price target, impressed by its competitive moat and secular tailwinds in commercial aerospace. In contrast, Jim Cramer believes investors should wait for a lower entry on the stock.
Howmet also continues to reward shareholders through regular cash dividends and payout increases. The company pays a quarterly dividend of $0.14 per share, equivalent to an annualized payout of $0.56.
At a share price of approximately $217, this translates into a dividend yield of about 0.25%. Management increased the quarterly dividend by 17% in 2026, reflecting confidence in the company’s cash-generating capacity.
Hedge Fund Positioning
Meanwhile, institutional interest in Howmet Aerospace Inc. stock has been building. The number of hedge funds holding stakes increased to 93 in the second quarter from 75 in the first quarter. Kensico Capital ended the quarter with stakes worth $1.37 billion, while Citadel Investment Group increased its stake by 178% to $758.17 million.
While short interest increased to 10.15M as of September 30 from 8.5M as of August 30, it remains relatively small at 2.55%. This implies limited bearish positioning around the stock.
The Verdict
Howmet Aerospace Inc.’s underlying aerospace business is performing strongly. The central question is whether continued earnings growth, margin expansion, and cash generation can justify the valuation investors are paying for the shares.
While analyst optimism and favorable aerospace industry trends support the long-term investment case, the risk of valuation compression remains significant if operating performance disappoints.
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