Long-established in the Aerospace & Defense industry, Howmet Aerospace Inc (HWM, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 1.91%, juxtaposed with a three-month change of -2.23%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Howmet Aerospace Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 6/10
- Growth rank: 2/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned Howmet Aerospace Inc the GF Score of 68 out of 100, which signals poor future outperformance potential.
Snapshot of Howmet Aerospace Inc's Business
With a market cap of $19.36 billion and sales of $6.2 billion, Howmet Aerospace Inc operates primarily in the aerospace, commercial transportation, and industrial markets. The company offers innovative solutions through differentiated products such as airfoils with advanced cooling and coatings for extreme temperature applications, specially designed fasteners for lightweight composite airframe construction, reduced assembly costs, and lightning strike protection and lightweight aluminum commercial wheels. It operates through four reportable segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels.
Financial Strength Analysis
Howmet Aerospace Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 4.71, which positions it worse than 67.88% of 193 companies in the Aerospace & Defense industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Additionally, the company's low cash-to-debt ratio at 0.13 indicates a struggle in handling existing debt levels.
Growth Prospects
A lack of significant growth is another area where Howmet Aerospace Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -4.3 per year over the past three years, which underperforms worse than 69.96% of 263 companies in the Aerospace & Defense industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Howmet Aerospace Inc has a strong reputation in the industry, its current financial and growth indicators suggest that it may struggle to maintain its historical performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
