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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Howmet Aerospace Inc. (XNYS:HWM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
HWM
Name:
HOWMET AEROSPACE INC. (XNYS:HWM)
Sector:
- 7000.00K
Industry:
Specialty Industrial Machinery
CEO:
Mr. John C. Plant
Total Employees:
19,900
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 0.52% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF HOWMET AEROSPACE INC.(HWM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY INDUSTRIAL MACHINERY INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
35.02
One Month Price Target:
$35.33
Six Month Price Target :
$36.9
Likely Price in One Year's Time:
Ticker:
$38.78
Likely Trading Range Today Under (Normal Volatility)
$34.86
Price Upper limit ($) :
$35.26
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$32.66
This week:
$29.74
This month :
$24.45
Other Primary facts
Market Cap:
14.43B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
415.40M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
26.36%
-16.4%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$45.98
$40.91
$24.06
$29.13
Medium risk (<10%) entry points
Buy Call
Sell Call
$39.26
Buy Put:
Sell Put:
$38.18
$30.77
$31.86
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
HWM
Sharpe Ratio:
3.04%
Comparison:
HWM, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 60.65% higher than the industry
& ratio is 33.54% higher than the market/S&P 500 average
Average Returns/Yield of
HWM
Daily returns:
0.11%
Weekly returns:
0.55%
Monthly returns:
2.21%
Yearly returns:
16.25%
Comparison of returns:
Average annual returns/yield (last 3 years) is 63.21% above industry average
Classification:
HWM, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.84
Statistical test of Returns:
HWM has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.34%
Weekly Volatility:
7.47%
Monthly Volatility:
14.94%
Yearly Volatility:
51.74%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.78%
Volatility in last five trading days has been -76.51% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.75%
Weekly VaR:
-15.09%
Monthly VaR:
-30.18%
How Much Can the price of
HWM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-25%
Worst case (decline):
>85%
This translates to price declining to:
$26.12
This translates to price declining to:
$5.25
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
HWM is a 113.00% riskier investment compared to the market/S&P 500 & is 82.48% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 22.07% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
HWM
Beta in relation to market/S&P 500--1.60
Expected beta in 1 year's time:
1.554
Expected beta in 3 year's time:
2.198
Unlevered (debt free) Beta:
0.803
Beta in relation to Nasdaq (XNAS):
0.92
Beta in relation to all global stocks::
0.928
Beta Comparison & Analysis
Beta of competitors/peers::
1.29
Beta is 23.83% higher than peers
Average Industry Beta:
1.281
Beta is 24.66% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
11.52%
Sustainable growth rate is -22.61% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.124
Alpha is 187.62% above industry average alpha yield
Alpha is 791% higher than market/& is unsustainably high
Analysis of Cost of Capital of
HWM
Equity cost of capital:
0.141
Equity cost of capital is 18.15% above industry mean WACC
Unlevered (without debt) cost of capital:
7.08%
Before-tax cost of debt:
6.33%
After-tax cost of debt:
5.00%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
5.00%
WACC is -73.40% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$12.25
Revenue growth rate per share of (3Y):
4.21
Annual revenue growth rate is -394.17% below industry average
EPS:
$0.71
Expected Annual growth rate of EPS (3Y):
-17.48%
Expected future EPS growth rate is -673.19% lower than the Specialty Industrial Machinery industry
Free cash flow (FCF) per share:
$0.71
Balance sheet equity growth per share: -82.07%
Equity growth rate per share is -860.32% lower than the industry
Debt per share
$10.18
EBITDA per share
$2.21
Valuation Analysis Today of
HWM
P/E Ratio:
38.93
P/E Ratio of Competitors/Peers:
19.84
P/E ratio is 96.21% higher than main peers & is 41.50% higher than the industry
Stock price/value with industry average P/E ratio: $19.54
HWM is 79.27% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $7.22
Present value of the expected future dividends only: $0.57
P/S (Price to Sales ratio):
2.86
Price to sales ratio is -31.08% below the industry mean
P/B (Price to book value ratio):
4.21
Price to free cash flow: 49.58
-
Net income growth rate (3Y):
-54.87%
Net income growth rate is -4176.57% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 2.91%
Dividend yeild: 0.23%
Previous Dividend: $0.02
Previous adjusted dividend: $0.02
Previous Dividend: $0.08
-
-
Average dividend payment (long-term): $0.02
Average dividend increase/decrease (growth rate) % per period: 0.00%
Expected next dividend payment date: 23/08/2022
Expected next dividend record date: 08/04/2022
Expected next dividend declaration date: 20/07/2022
Previous dividend payment date: 25/05/2022
Previous dividend record date: 05/06/2022
Previous dividend declaration date: 21/04/2022
Dividend History:
2022-05-05--$0.02
2021-11-04--$0.02
2020-02-06--$0.02
2022-02-03--$0.02
2021-08-05--$0.02
2019-11-07--$0.02
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
122.30%
Net debt to equity ratio:
107.35%
Debt to assets ratio:
41.74%
Net debt to assets ratio:
36.64%
Debt-to-asset ratio is -22.64% below industry average
Ability to repay debt:
Interest coverage ratio:
3.43
Interest coverage ratio is -82.45% less than industry average
Looking forward:
Debt growth rate:
-14.36%
Annual debt growth is -119% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.638
Statistical significance of correlation:
HWM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.635
Stock price is 0.42% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.635
Correlation of price movement with Nasdaq (^IXIC):
0.043
Covariance of price movement with the market:
0.084
Kurtosis
9.653
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.698
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
HWM
Gross Profit Margin Ratio:
111%
Operating Profit Margin Ratio:
15.51%
Operating profit margin is -164.05% lower than the industry
Net Profit Margin Ratio:
111%
Effective Tax Rate:
19.11%
Effective tax rate is 2.27% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
8.94%
Return on equity (ROE) is 166.02% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
3.05%
Return on assets (ROA) is -35.00% lower than the industry
Financial Leverage:
1.7x
Current Ratio:
2.22
Current ratio is -26.62% below industry average
Cash Conversion Cycle (days):
-16.8
Cash conversion cycle is -127.26% below industry average
The remaining useful life of property plant & equipment is: 3.6 years
Stock based compensation to net income ratio:
3.56%
In-depth Efficiency Analysis
Revenue generated per employee:
255.6K
Each employee generates -93% less revenue than industry average revenue per employee
EBITDA generated per employee:
46.1K
Each employee generates -94% less EBITDA than industry average revenue per employee
Profit generated per employee:
15.5K
Each employee generates -96% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 0.4K
Each employee generates -101% less free cash flow than industry average revenue per employee
Assets/Capital per employee
369.2K
Each employee generates -101% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
HWM
QUANTA SERVICES, INC. (XNYS:PWR)
TEXTRON INC. (XNYS:TXT)
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION (XNYS:WAB)
China Southern Airlines Company Limited (XNYS:ZNH)
GRACO INC (XNYS:GGG)
LENNOX INTERNATIONAL INC. (XNYS:LII)
XPO LOGISTICS, INC. (XNYS:XPO)
ALLEGION PUBLIC LIMITED COMPANY (XNYS:ALLE)
TREX COMPANY, INC. (XNYS:TREX)
Current Analyst Ratings
Strong buy�0%
Buy�0%
Hold�0%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: -
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
5.09B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
3.67B
1.41B
19.00M
192.00M
261.00M
-
202.00M
482.00M
2.00M
268.00M
268.00M
918.00M
789.00M
309.00M
382.00M
73.00M
309.00M
Statement of Cash Flow
Date:
Period:
66.00M
Differed Income Tax :
28.00M
Stock Based Compensation :
11.00M
Change in Working Capital :
- 181000.00K
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
-
Net Cash Provided by Operating Activities:
55.00M
Investments in PP&E:
-
Net Acquisitions:
1.00M
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
520.00M
-
520.00M
479.00M
1.48B
300.00M
2.78B
2.40B
4.05B
543.00M
-
149.00M
202.00M
7.35B
-
10.13B
777.00M
3.00M
63.00M
-
475.00M
1.26B
4.23B
1.19B
5.42B
-
6.67B
418.00M
725.00M
- 1864000.0K
4.18B
March 31, 2022 at 6:00:00 AM
4.16B
3.46B
10.13B
-
4.23B
3.7B
-
2.00M
3.00M
-
-
- 175000.00K
- 9000.00K
- 10000.00K
- 194000.00K
-
- 200000.00K
522.00M
722.00M
55.00M
- 62000.00K
- 7000.00K
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
HWM
2023
2024
2025
2026
2027
$32.85
$36.37
$40.28
$44.60
$49.39