Critical Review: Howmet Aerospace (NYSE:HWM) versus GE Aerospace (NYSE:GE)

Howmet Aerospace (NYSE:HWM) and GE Aerospace (NYSE:GE) are both large-cap aerospace companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.

Insider and Institutional Ownership

90.5% of Howmet Aerospace shares are held by institutional investors. Comparatively, 74.8% of GE Aerospace shares are held by institutional investors. 0.9% of Howmet Aerospace shares are held by insiders. Comparatively, 0.2% of GE Aerospace shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Howmet Aerospace pays an annual dividend of $0.48 per share and has a dividend yield of 0.2%. GE Aerospace pays an annual dividend of $1.88 per share and has a dividend yield of 0.5%. Howmet Aerospace pays out 11.1% of its earnings in the form of a dividend. GE Aerospace pays out 22.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Howmet Aerospace has increased its dividend for 5 consecutive years and GE Aerospace has increased its dividend for 2 consecutive years.

Volatility and Risk

Howmet Aerospace has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, GE Aerospace has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500.

Profitability

This table compares Howmet Aerospace and GE Aerospace’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Howmet Aerospace	20.23%	29.27%	13.20%
GE Aerospace	17.72%	40.56%	5.84%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Howmet Aerospace and GE Aerospace, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Howmet Aerospace	0	4	18	0	2.82
GE Aerospace	1	2	16	1	2.85

Howmet Aerospace presently has a consensus target price of $293.21, suggesting a potential upside of 7.70%. GE Aerospace has a consensus target price of $370.33, suggesting a potential upside of 6.24%. Given Howmet Aerospace’s higher possible upside, equities analysts clearly believe Howmet Aerospace is more favorable than GE Aerospace.

Valuation and Earnings

This table compares Howmet Aerospace and GE Aerospace”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Howmet Aerospace	$8.25 billion	13.20	$1.51 billion	$4.31	63.17
GE Aerospace	$45.85 billion	7.89	$8.70 billion	$8.49	41.06

GE Aerospace has higher revenue and earnings than Howmet Aerospace. GE Aerospace is trading at a lower price-to-earnings ratio than Howmet Aerospace, indicating that it is currently the more affordable of the two stocks.

Summary

Howmet Aerospace beats GE Aerospace on 10 of the 18 factors compared between the two stocks.

About Howmet Aerospace

Howmet Aerospace Inc. provides advanced engineered solutions for the aerospace and transportation industries in the United States, Japan, France, Germany, the United Kingdom, Mexico, Italy, Canada, Poland, China, and internationally. It operates through four segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. The Engine Products segment offers airfoils and seamless rolled rings primarily for aircraft engines and industrial gas turbines; and rotating and structural parts. The Fastening Systems segment produces aerospace fastening systems, as well as commercial transportation, industrial, and other fasteners; and latches, bearings, fluid fittings, and installation tools. The Engineered Structures segment provides titanium ingots and mill products, aluminum and nickel forgings, and machined components and assemblies for aerospace and defense applications; and titanium forgings, extrusions, and forming and machining services for airframe, wing, aero-engine, and landing gear components. The Forged Wheels segment offers forged aluminum wheels and related products for heavy-duty trucks and commercial transportation markets. The company was formerly known as Arconic Inc. Howmet Aerospace Inc. was founded in 1888 and is based in Pittsburgh, Pennsylvania.

About GE Aerospace

GE Aerospace (also known as General Electric) is a company that specializes in providing aerospace products and services. It operates through two reportable segments: Commercial Engines and Services and Defense and Propulsion Technologies. It offers jet and turboprop engines, as well as integrated systems for commercial, military, business, and general aviation aircraft. GE demerged into GE Vernova, GE Aerospace, and GE Healthcare.