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Fundamental View
AS OF 24 Feb 2026In an industry beset by manufacturing issues and operational hiccups, HWM continues to perform admirably while also paying down debt.
Despite very low leverage, Howmet continues to pay down debt; the USD 2026 Term Loan was paid down during the quarter. Given the strong outlook, we continue to expect upgrades into the low ‘A’ category this year, as Fitch has already done post-earnings.
We retain an Outperform view on HWM credit, which we expect will continue to move higher in ratings. We expect the credit will Outperform in a widening market environment due to its relatively short duration, defensive nature and strong cash flows.
Business Description
AS OF 24 Feb 2026- Howmet Aerospace Inc. is the surviving entity of the legacy Alcoa Inc. following two major spin-off transactions in 2016 when Alcoa was spun off and in 2020 when Arconic was spun out. Howmet is now focused on high value add, high margin aluminum, titanium and nickel superalloy casting and forging.
- Products are sold into the Commercial Aerospace , Defense Aerospace, Commercial Transportation, and other end markets. Howmet also has four reportable segments: Engine Products Fastening Systems, Engineered Structures, and Forged Wheels. The Engine Products segment produces investment casting – including airfoils and seamless rolled rings – as well as rotating and structural parts. The Fastening Products segment produces aerospace and industrial fasteners as well as those sold into the commercial transportation, automotive, renewables, construction, and industrial equipment. Engineered Structures produces titanium ingots and mill products for aerospace and defense applications as well as produces aluminum forgings, nickel forgings, and aluminum machined components. Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and commercial transportation.
- Howmet operates 62 facilities in 11 different countries (primarily the US and the UK) and receives the majority of its revenue from the US and Europe.
Risk & Catalysts
AS OF 24 Feb 2026Aerospace industry is still going strong even as there are signs of a potential slowdown. Domestic travel boom significantly benefited narrowbody business while international travel supporting the next stage for widebody recovery.
However, there are signs that passenger demand may start to falter- at least domestically in the US- and we’ll be tracking how much of the booming OE demand will be realized over the next few years.
Increased energy demand driven by the AI boom will be driving higher volumes and demand for HWM’s portfolio of IGT products.
Forged wheels segment faces persistent headwinds from the still-weak trucking industry. However, HWM has an edge in the segment thanks to its lightweight products.
Tariffs impacts appear to be minimal thanks to the ability to pass the costs to customers.
Key Metric
AS OF 24 Feb 2026| $ mn | Y23 | Y24 | Y25 | LTM 4Q25 |
|---|---|---|---|---|
| Revenue | 6,640 | 7,430 | 8,252 | 8,252 |
| EBITDA | 1,508 | 1,925 | 2,413 | 2,413 |
| EBITDA Margin | 23.0% | 27.4% | 30.0% | 30.0% |
| EBITDA-CAPEX-INT % of Revenues | 64.4% | 76.5% | 87.6% | 87.6% |
| Total Debt | 3,706 | 3,315 | 3,050 | 3,050 |
| Net Debt | 3,096 | 2,751 | 2,308 | 2,308 |
| Net Leverage | 2.1x | 1.4x | 1.0x | 1.0x |
CreditSight View Comment
AS OF 17 Feb 2026We expect HWM’s (Baa1/BBB+/A-; S/S/S) February issuance will total $1.2bn across the three tenors. The deal comes on the heels of last week’s upgrade of the credit to A- at Fitch. Based on agency commentary today, an upgrade to A- appears to continue to be on track at S&P in 2026, while a Moody’s upgrade to A3 may come next year. Fitch’s ratings triggers leave the door open to a further upgrade to mid-A if HWM maintains leverage at the low end of its stated policy. Howmet’s credit re-rating continues due to the strong results and cash flow it has generated, robust aerospace & defense outlook and company positioning (now including a strong gas turbine market), and debt paydown with low leverage. We retain an Outperform view on the credit for these reasons.
Recommendation Reviewed: February 17, 2026
Recommendation Changed: March 02, 2022
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