Stock Analysis | Howmet Aerospace Outlook - A Technical and Fundamentals Dilemma

Market Snapshot

Takeaway: Howmet Aerospace (HWM) is currently trading with a negative price trend (-5.34%) and weak technical signals, suggesting caution for investors. Our internal diagnostic score for technical indicators stands at 3.87—a clear warning sign.

News Highlights

• On May 28, 2025, Danish Aerospace Company A/S and NECAS A/S announced a strategic partnership to boost Danish defense and space technology. This could indirectly benefit aerospace players with global supply chains.
• On May 30, Northrop Grumman invested $50 million in Firefly Aerospace to co-develop a medium launch vehicle. This highlights a broader trend of increased investment in space technology, though direct benefits to Howmet remain uncertain.
• Also on May 30, Brazilian aerospace giant Embraer announced the opening of a subsidiary in India, signaling potential global expansion in the sector. While this is positive for the industry, it doesn’t directly translate to improved performance for HWM.

Analyst Views & Fundamentals

Analyst Ratings and Consistency

Recent analyst ratings for HWM show mixed signals: the simple average rating is 4.25, while the performance-weighted rating is only 1.15, indicating a significant divergence in expectations and outcomes. The market remains pessimistic, with most analysts assigning an "Underperform" label, and the current price trend aligns with this bearish outlook.

Fundamental Factor Summary

Howmet’s internal diagnostic score for fundamentals is 2.25, pointing to weak overall financials. Here’s a breakdown of key metrics:

• Return on Assets (ROA): 3.68% (score: 2.22 out of 10) – a modest but underperforming return.
• Net Profit Margin (NPM): 19.82% (score: 2.76 out of 10) – a decent margin, but not enough to offset poor performance in other areas.
• EBIT/Total Operating Revenue: 24.83% (score: 2.44 out of 10) – reflects a relatively healthy operating margin, but not strong enough to turn the stock around.
• Current Ratio: 2.31 (score: 2.64 out of 10) – indicates reasonable liquidity but lacks strength.
• Long-Term Debt to Working Capital Ratio: 210.32% (score: 2.18 out of 10) – shows a heavy leverage burden.
• Net Income/Revenue: 65.79% (score: 3.34 out of 10) – this high ratio may suggest accounting irregularities or one-time gains.

Overall, while some key metrics appear strong, the poor performance in debt and return ratios is a significant drag on the company’s fundamentals.

Money-Flow Trends

Howmet Aerospace is currently seeing negative inflow trends across all investor categories. The fund-flow score is 7.69 (our internal diagnostic score), which might seem positive at first glance, but it’s counterintuitive in this case. This high score reflects that retail and institutional flows are moving in the same direction—down.

Here are the inflow ratios by investor size:

• Small investor inflow ratio: 48.52%
• Medium investor inflow ratio: 47.56%
• Large investor inflow ratio: 47.73%
• Extra-large investor inflow ratio: 45.45%

These figures confirm that big-money flows are not protecting HWM and suggest a broad-based loss of confidence, even from professional money managers.

Key Technical Signals

The technical outlook for HWM is extremely weak, with a technical score of 3.87. The chart has shown no bullish indicators and 1 bearish signal over the last 5 trading days. Here are the most recent patterns:

• 20250822: Bearish Engulfing (bearish signal, internal diagnostic score: 1.0), WR Oversold (bullish bias, score: 6.73) – conflicting signals, but bearish dominance is clear.
• 20250819: WR Oversold (bullish bias) – a potential rebound failed to materialize.

Recent indicator details show that WR Oversold has historically been successful in 56% of cases, with an average return of 2.22%, but it is currently being overshadowed by the Bearish Engulfing pattern, which has a poor win rate of 33.3% and a negative average return of -0.91%.

Conclusion

Howmet Aerospace is underperforming on both technical and fundamental fronts, with analyst consensus leaning heavily toward caution. The weak technical signals and high leverage are red flags for investors. Although the stock has shown occasional oversold conditions, the bearish momentum remains strong.

Actionable Takeaway: Investors are advised to consider waiting for a clearer breakout or a positive earnings surprise before entering a position. Until the technical indicators and fundamentals align in a more positive direction, HWM remains a stock to avoid.