Howmet currently trades at $126.70 and has been a dream stock for shareholders. It’s returned 618% since March 2020, blowing past the S&P 500’s 122% gain. The company has also beaten the index over the past six months as its stock price is up 33.9%.
Is now still a good time to buy HWM? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Is HWM a Good Business?
Inventing the first forged aluminum truck wheel, Howmet (NYSE:HWM) specializes in lightweight metals engineering and manufacturing multi-material components used in vehicles.
1. Skyrocketing Revenue Shows Strong Momentum
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Howmet’s annualized revenue growth of 14.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Howmet’s EPS grew at a spectacular 16.1% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Howmet’s margin expanded by 18.1 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Howmet’s free cash flow margin for the trailing 12 months was 13.1%.
Final Judgment
These are just a few reasons why we're bullish on Howmet, and with its shares topping the market in recent months, the stock trades at 39.6× forward price-to-earnings (or $126.70 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
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