Howmet Aerospace Plunges 6.4% as Investors Favor RTX

On April 4, 2025, Howmet Aerospace experienced a significant drop of 6.4% in pre-market trading, reflecting a notable shift in investor sentiment towards the aerospace and defense sector.

Analysts have compared Howmet Aerospace with RTX Corporation, noting that RTX's current valuation and Zacks Rank #2 (Buy) rating make it a more attractive investment option compared to Howmet's Zacks Rank #3. This comparison suggests that investors may be favoring RTX over Howmet due to its perceived stronger fundamentals and growth prospects.

Additionally, Howmet's expensive valuation has been highlighted as a reason for caution among existing investors. The high price-to-earnings ratio and other valuation metrics indicate that the stock may be overvalued, which could be contributing to the recent sell-off.

The aerospace and defense industry has seen steady growth in earnings and revenues over the past few years, with earnings growing at an average rate of 8.6% per year and revenues increasing by 9.8% annually. However, the current price-to-earnings ratio of 32.8x for the industry is higher than its 3-year average of 28.9x, suggesting that investors are optimistic about long-term growth but may be overpaying for current earnings.