Howmet Posts Strong Gas Turbine and Aerospace Growth, But Thesis Unchanged

What happened

The Motley Fool article reports that Howmet's industrial gas turbine revenue grew 45% in the third quarter and commercial aerospace revenue increased 32% year over year, confirming strong end-market demand. These growth rates align with the existing DeepValue thesis that elevated aftermarket/spares demand and gas turbine tailwinds are supporting top-line expansion. However, the master report already priced in such strength, with the stock trading at a 67.1x P/E and 42.8x EV/EBITDA, and the market narrative as crowded. The article provides no new information on the key swing factors: CAM integration metrics, tariff pass-through timing, or margin trajectory. Therefore, while the revenue growth is positive, it does not address the main risks and does not change the WAIT rating or the view that the stock lacks margin of safety at current levels.

Implication

The strong revenue growth in industrial gas turbines and commercial aerospace validates the company's end-market exposure but is already reflected in consensus and the stock's premium multiple. The critical unknowns remain the CAM acquisition's contribution to margins and working capital, where early quarters post-close (April 2026) have yet to show clear results. Tariff pass-through timing lags could still compress margins, and the next few quarters will reveal whether the company can sustain its ~30% Adjusted EBITDA margin target. At an equity FCF yield near 1.5-1.6%, the risk/reward is unattractive for new entries, and existing holders should consider trimming if the stock approaches $300. More attractive entry points exist near $220 if the company demonstrates stable margins and clear CAM synergies, but until then, patience is warranted.

Thesis delta

The reported revenue growth does not alter the fundamental thesis. It confirms strong demand but does not resolve the key uncertainties around CAM integration and margin sustainability. Consequently, the WAIT rating and valuation concerns remain unchanged.