The company impressed with both its trailing performance in challenging conditions, and its profitability guidance.
Even by the very bullish standards of stock trading on Wednesday, Howmet Aerospace (HWM 12.43%) was an outlier in the best way possible. On news of a massive earnings beat by the aerospace company, investors piled into the stock, sending its share price over 12% higher on the day. That compared extremely favorably to the frothy S&P 500 (^GSPC 2.53%), which booked a relatively generous gain of 2.5%.
A crushing beat for third-quarter profitability
Howmet unveiled its third-quarter results well before market open, giving investors plenty of time to get excited about buying into the company. Revenue for the period was $1.84 billion, representing year-over-year growth of 11%. Despite the double-digit improvement, analysts tracking the stock were collectively modeling a slightly higher figure of $1.85 billion.
The reality-versus-expectations dynamic was quite different on the bottom line. Net income according to generally accepted accounting principles (GAAP) reporting standards was $332 million, or $0.81 in earnings per share (EPS), quite the improvement over the $188 million the company earned in the third quarter of 2023. That surely blindsided at least a few pundits, as their average estimate was only $0.65 per share.
Howmet managed those double-digit increases despite a strike at one of its most important clients, Boeing — quite an admirable feat. The company also pointed out that it had to cope with “notably weaker” market conditions with its European customers in an important segment: forged wheels.
EPS guidance also exceeds
In the earnings release, Howmet laid out its guidance for both the current (fourth) quarter and the entirety of 2024. For the latter period, it’s modeling $7.39 billion to $7.43 billion in revenue, which is a bit below the average analyst projection of $7.45 billion. On the other hand, its per-share net income is anticipated to hit $2.65 to $2.67, well ahead of the consensus estimate of $2.59.
Now that the Boeing strike has been settled, we can anticipate continued growth for Howmet, although the former company has had struggles besides labor unrest of late.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
