Should You Buy Howmet Stock After Its Turbine Blade Scare?

Howmet Aerospace (HWM) has experienced a significant decline, falling approximately 21% from its August high, prompting the question of whether this is an opportunity or a red flag. Historical data suggests that such drops have often proven beneficial, with eight out of 14 instances resulting in a higher stock price a year later, with an average one-year return of 8%.

However, buying during these dips typically involved enduring an additional 24% decline, with recovery peaking on average 162 days later, roughly five months.

The record of Howmet's performance in such scenarios depends on the investor's patience and the position they take while waiting. HWM exhibits strong fundamentals, with revenue growth of 18.1% over the trailing twelve months and a cash conversion rate of 24.4%. Growth is primarily driven by gas turbine revenue, which increased by 38% in the second quarter of 2026, and a 37% rise in spares across various aerospace and defense sectors.

The recent drop in Howmet's stock is attributed to concerns that SpaceX and Tesla might begin manufacturing their own turbine blades. As Howmet controls more than half of the global market for turbine blades in gas turbines, the company's growth is capped by any new entrants in the blade manufacturing space. This could potentially limit the growth of a new competitor due to shared equipment requirements.

The current stock price of Howmet is around 52 times earnings, slightly higher than the S&P 500's average of 23, but it has still seen a 30.2% increase over the past year. While the stock is currently trading within a range of $178.61 to $231.53, indicating potential for further decline, it also presents an opportunity for substantial gains. Investors should consider how their largest positions might impact their overall portfolio, as advised by the Trefis Wealth team.