Finvest
HWM Aerospace & Defense · Aerospace supplier · Industrial gas turbines · High margin · Thesis updated July 19, 2026

Aerospace upcycle, now with a power tailwind

01 Running thesis

Jet engines drive the story

Howmet is a high-end parts maker for planes, jet engines, industrial gas turbines, and heavy trucks. The current thesis is simple: aerospace demand is strong, and Howmet is turning that demand into higher margins.

Q1 2026 made the bull case stronger. Engine Products grew sales 29% year over year and reached a 36.6% adjusted EBITDA margin, a profit margin before interest, taxes, depreciation, and amortization. Fastening Systems also grew, and every segment improved margin from a year earlier.

A new tailwind is power demand. Industrial gas turbine revenue rose 39% year over year, helped by electricity needs from data centers. Management also pointed to more than 50% global market share in turbine blades, which gives Howmet a strong seat in that market.

The pushback is price and cycle risk. Finn's performance and financial health scores are strong, but valuation is weaker. If Boeing or Airbus production stumbles, if truck demand stays soft, or if the CAM deal brings cost issues, the stock could have less room for error.

May 2026▲Q1 2026 strengthened the thesis. Engine Products grew 29%, margin expanded about 400 basis points, industrial gas turbines rose 39%, and the $1.8 billion CAM deal closed in April.
Oct 2025▲Boeing and the FAA agreed to lift 737 MAX production from 38 to 42 aircraft per month. That gave Howmet a clearer path to aerospace volume growth.
Jul 2025→Q2 2025 kept the same split story. Aerospace segments grew with better margins, while Forged Wheels stayed weak as commercial transportation recovery moved later.
May 2025▲Q1 2025 showed strong margin expansion in Engine Products and Fastening Systems. The same filing also confirmed weakness in commercial transportation, with Forged Wheels sales down 13%.
Feb 2025→The initial thesis framed Howmet as a key supplier to aerospace and transportation. The bull case was aerospace growth and margin expansion, while the bear case was customer production risk and cyclical demand.
02 Business model

Critical parts, hard to copy

Howmet makes parts that must work under heat, stress, and tight safety rules. Its products include airfoils for jet engines, rolled rings, aerospace fasteners, airframe parts, titanium products, and forged aluminum wheels.

The company earns money by selling these parts to large aerospace, defense, industrial, and transportation customers. Its biggest advantage is manufacturing know-how. Customers do not switch suppliers quickly when a part is tied to aircraft safety, engine performance, and long approval cycles.

That also creates the main weak spot. Howmet depends on customer build rates, especially aircraft and engine production. When Boeing, Airbus, GE Aerospace, RTX, or other major customers slow down, Howmet can feel it.

Management is also shaping the portfolio. In Engineered Structures, it sold a disk forging facility and is cutting lower-value work. That can hurt reported sales, but the goal is better profit quality.

03 Product portfolio

Four ways Howmet sells precision

Growth engine

Engine Products

This segment makes airfoils, investment castings, and rolled rings for aircraft engines and industrial gas turbines. It is the largest segment and had the strongest Q1 2026 growth and margin.

Growth engine

Fastening Systems

This unit makes rivets, bolts, installation tools, and other fasteners used in aircraft, engines, and transportation equipment. The CAM acquisition adds scale here, but integration is a key watch item.

Steady

Engineered Structures

This segment makes titanium products, forgings, extrusions, and machined components for airframes, wings, and landing gear. Sales fell in Q1 2026 because Howmet is pruning products and plants.

Cash cow

Forged Wheels

This business sells forged aluminum wheels for trucks, buses, and trailers under the Alcoa Wheels brand. It can be profitable, but demand depends on the commercial transportation cycle.

Option

Industrial gas turbine blades

These blades serve power turbines, not only aircraft engines. Q1 2026 revenue in industrial gas turbines rose 39% year over year, helped by data center electricity demand.

04 Business segments

Q1 sales mix

Engine Products54%growing fast
Fastening Systems20%growing fast
Engineered Structures13%declining
Forged Wheels13%modest

Segment shares are based on Q1 2026 third-party sales: Engine Products $1,253 million, Fastening Systems $471 million, Engineered Structures $294 million, and Forged Wheels $295 million. Aerospace represented about 68% of Q1 2026 revenue, so aircraft and defense demand remain the main swing factor.

05 Risk factors

What could break the thesis

Boeing or Airbus build-rate slips

High impact · Medium odds

Howmet's aerospace growth depends on aircraft and engine production. Boeing 737 MAX rates are especially important because earlier production limits were a known headwind. If major aircraft makers miss rate plans, Howmet may lose volume and operating leverage.

We watchBoeing 737 MAX monthly production rates, Airbus delivery targets, and Howmet aerospace order commentary.

Truck market stays weak

Medium impact · Medium odds

Forged Wheels revenue rose in Q1 2026, but management said the gain came from cost pass-throughs, not stronger volume. The company expects demand to remain low with only modest recovery in the second quarter of 2026. A longer downturn would pressure this cash-generating business.

We watchForged Wheels unit volume, commercial transportation demand language, and North American truck production data.

CAM integration costs

Medium impact · Medium odds

Howmet closed the $1.8 billion CAM acquisition in April 2026. The deal can help Fastening Systems, but acquisitions can bring plant, labor, customer, and systems costs. If those costs run high, margin gains could slow.

We watchFastening Systems revenue growth, segment adjusted EBITDA margin, and management updates on CAM synergy timing.

Engineered Structures pruning cuts too deep

Medium impact · Medium odds

Engineered Structures sales fell 3% in Q1 2026 due to product rationalization and the sale of a Savannah disk forging facility. Margin improved, which supports the plan. The open question is how much sales base Howmet must give up to get those better margins.

We watchEngineered Structures sales trend, margin trend, and any new facility sale or product exit.

Raw material or plant disruption

High impact · Low odds

Howmet uses titanium, nickel superalloys, aluminum, and other specialized materials. Some inputs come from limited supplier bases. A supply disruption or major plant issue could stop shipments to customers that need certified parts on time.

We watchCompany comments on titanium sponge, specialty alloy supply, tariff exposure, and delivery delays.
06 Quick answers

In one breath

What does Howmet Aerospace actually make?

Howmet makes high-performance metal parts for aircraft engines, airframes, industrial gas turbines, and heavy trucks. Its products include airfoils, rolled rings, fasteners, titanium parts, and forged aluminum wheels.

Why does data center power demand matter for Howmet?

Data centers need more electricity, and some of that demand supports industrial gas turbines. Howmet makes turbine blades and management pointed to more than 50% global market share in that product area.

Is Howmet mainly an aerospace company?

Yes. Aerospace, including commercial and defense, was about 68% of Q1 2026 revenue. The rest includes commercial transportation, industrial, and other markets.

What is the biggest risk for HWM stock?

The biggest business risk is a slowdown in aircraft and engine production, especially from major customers and programs. The biggest stock risk is valuation, because strong performance is already reflected in the price.