Howmet Aerospace: Leveraging Defense and Commercial Aerospace Momentum for Long-Term Outperformance

The aerospace industry is undergoing a transformative phase, driven by surging defense spending and the gradual recovery of commercial aviation. At the forefront of this dual momentum is Howmet Aerospace (HWM), a global leader in engineered products and systems for aerospace and industrial markets. With its diversified portfolio spanning defense, commercial, and industrial sectors, Howmet is uniquely positioned to capitalize on macroeconomic tailwinds, including geopolitical tensions, modernization of military infrastructure, and the resurgence of air travel. This analysis explores how Howmet's strategic alignment with high-growth aerospace segments-coupled with its robust financial performance and forward-looking guidance-positions it as a compelling long-term investment.

Defense Aerospace: A 24% Growth Engine in 2025

The defense aerospace sector has emerged as a critical growth driver in 2025, with industry-wide demand surging due to heightened global security concerns and large-scale military modernization programs. While Howmet has not disclosed a specific growth rate for its defense segment, broader industry trends underscore its potential. For instance, Raytheon Technologies (RTX) reported a 10% year-over-year increase in defense sales in Q3 2025, fueled by contracts for Patriot air defense systems, according to an RTX report. Similarly, Boeing's Defense, Space & Security (BDS) segment saw a 25% revenue jump in the same period, driven by a $2.8 billion U.S. Space Force contract and a $2.7 billion PAC-3 seeker production deal, as reported in the Boeing Q3 report.

Though Howmet's defense segment growth rate is not explicitly quantified, its third-quarter 2025 results reflect broader industry strength. The company reported a 14% year-over-year revenue increase, with defense aerospace contributing to this expansion, according to its Howmet Q3 results. Analysts note that Howmet's advanced materials and thermal management solutions are critical to next-generation defense platforms, including hypersonic weapons and stealth aircraft, which are expected to dominate procurement pipelines in the coming decade.

Commercial Aerospace: Rebuilding for Sustained Growth

While defense aerospace provides a near-term tailwind, Howmet's commercial aerospace segment is reaccelerating after years of pandemic-related headwinds. In Q3 2025, the company reported a 15% year-over-year increase in commercial aerospace revenue, according to Howmet's Q3 results, a sign that global air travel is nearing pre-pandemic levels. This trend is supported by Boeing's commercial aviation segment, which has seen a 12% rise in orders year-to-date, driven by low-cost carriers and emerging markets per the Boeing Q3 report.

Howmet's exposure to commercial aerospace is particularly advantageous due to its focus on high-margin, long-life components such as engine parts and structural systems. These products benefit from the "buy-to-lease" model, where airlines increasingly outsource aircraft maintenance and parts management, creating recurring revenue streams for suppliers like Howmet.

Financial Guidance and EPS Outperformance: A Foundation for Shareholder Value

Howmet's financial performance in 2025 has exceeded expectations, with the company raising its full-year guidance across all metrics. In Q3 2025, revenue reached $2.09 billion, up 14% year-over-year, while the company announced a 2026 revenue target of $9 billion-reflecting a projected 10% year-over-year increase, according to Howmet's Q3 results. This guidance is underpinned by strong free cash flow generation and disciplined capital allocation.

Notably, Howmet executed $200 million in share repurchases in Q3 2025 and an additional $100 million in October 2025, as disclosed in Howmet's Q3 results, signaling confidence in its long-term value. These actions, combined with its elevated EBITDA margins (which expanded to 22% in Q3 2025 per Howmet's Q3 results), suggest a company prioritizing both growth and shareholder returns. While specific EPS figures for FY2025 are not yet public, the company's revenue trajectory and margin discipline imply robust earnings per share growth.

Strategic Positioning for 2026 and Beyond

Howmet's dual exposure to defense and commercial aerospace, coupled with its technical expertise in high-margin materials, creates a durable competitive advantage. The company's 2026 revenue target of $9 billion aligns with broader industry forecasts, which anticipate a 7–9% compound annual growth rate (CAGR) for aerospace and defense markets through 2030, as noted in the RTX report.

Investors should also consider Howmet's supply chain resilience. Unlike competitors reliant on single-use components, Howmet's thermal management systems and additive manufacturing capabilities are integral to both commercial and defense platforms, reducing exposure to cyclical demand shifts. This diversification, combined with its strong balance sheet and $1.5 billion in cash reserves reported in Howmet's Q3 results, positions Howmet to navigate macroeconomic volatility while maintaining growth momentum.

Conclusion: A High-Conviction Play in Aerospace

Howmet Aerospace is a prime example of a company leveraging macroeconomic tailwinds through strategic diversification and operational excellence. With defense aerospace growth outpacing expectations, commercial aviation rebounding, and a clear path to $9 billion in 2026 revenue, the stock offers a compelling risk-reward profile. For investors seeking exposure to the aerospace renaissance, Howmet's upward trajectory-backed by industry-leading performance and disciplined capital allocation-makes it a standout opportunity ahead of the 2026 target.