Stock Analysis | Howmet Aerospace Outlook - Navigating Technical Neutrality Amid Analyst Disunity

Market Snapshot

Headline Takeaway: Howmet Aerospace (HWM) is currently in technical neutrality, with mixed signals from analysts and bearish fund flows, suggesting a cautious approach for investors.

News Highlights

• Northrop Grumman invests $50M in Firefly Aerospace: This $50 million investment is boosting the space launch sector, which could indirectly benefit Howmet as an aerospace supplier. The strategic move underscores growing interest in the aerospace market.
• Embraer opens Indian subsidiary: As Brazilian aerospace giant Embraer expands into India, it highlights the global growth potential in aerospace. Howmet, as a major supplier to aerospace and defense, could see increased demand in emerging markets.
• Strategic partnerships in Denmark: Danish Aerospace Company A/S and NECAS A/S have formed a partnership to boost local defense and space tech. This reinforces the global trend of collaboration in aerospace, a sector where Howmet is a key player.

Analyst Views & Fundamentals

Analysts remain divided on HWM. The simple average rating is 4.25, while the performance-weighted rating is just 1.15, highlighting poor historical accuracy among the firms involved. Notably, ratings are inconsistent: while B of A Securities rated it as a "Strong Buy" with a 50% historical win rate, others like Morgan Stanley and JP Morgan gave "Underperform" ratings with zero historical win rates.

Howmet's stock price has risen by 1.48% recently, but analyst expectations do not align with this upward trend. The market is pessimistic, and the mismatch suggests caution for investors.

Key Fundamental Factors

• Net profit attributable to parent company shareholders / Net profit (%): 99.87%, with an internal diagnostic score of 3.
• Operating cycle: 164.48 days, scoring 2 on our model.
• PCF (Price to Cash Flow): 182.99, scoring 3.
• Inventory turnover ratio: 1.3959 times per year, with a score of 2.
• Net income / Revenue: 65.94%, scoring 2.
• Income tax / Total profit (%): 17.92%, scoring 2.

Money-Flow Trends

Fund-flow patterns show that large, extra-large, and small investors are all exhibiting negative trends. The overall inflow ratio is 0.48, indicating a moderate outflow of capital. Retail investors are also on the sidelines, with only 47.83% of small investors showing inflows. This trend suggests market skepticism about the stock, with big money moving away.

Key Technical Signals

Technically, HWM is in a state of neutrality, with 3 bullish signals and 1 bearish signal. The internal diagnostic technical score is 5.66, suggesting a wait-and-see approach.

Key Indicator Scores:

• WR Oversold: 7.29 (internal diagnostic score) – a strong bullish signal.
• WR Overbought: 7.07 – also indicating a positive outlook but less bullish than WR Oversold.
• Dividend Payable Date: 8.07 – a strong positive score, especially with a 100% win rate historically.
• Bearish Engulfing: 1.74 – a clear bearish signal, though its overall impact is limited due to its low score.
• MACD Golden Cross: 4.11 – a neutral to slightly positive signal.

In recent sessions, key chart patterns include a Dividend Payable Date and WR Oversold on August 25, followed by a MACD Golden Cross on August 29. These signals indicate some short-term bullish momentum but remain mixed overall.

Conclusion

Howmet Aerospace is caught in a tug-of-war between positive technical indicators and weak analyst sentiment. With fund flows trending bearish and mixed analyst ratings, investors are advised to wait for a clearer directional signal before making significant moves. Watch for any follow-up on earnings or macroeconomic updates that could shift the stock’s trajectory.