HWM Value Scorecard - Howmet Aerospace

Value Scorecard · run 2026-10-18

13 value checks: 12 scored 1 to 5, plus moat evidence

45/60

moderate value score

Earnings & returns

EPS Trend

5/5

Diluted EPS: $1.11 (2022), $1.83 (2023), $2.81 (2024), $3.71 (2025). It rose every year; the framework scores that as 5.

ROE Trend

5/5

ROE (net income / common equity): 13.2% (2022), 19.2% (2023), 25.6% (2024), 28.1% (2025). Median 22.4%, lowest 13.2%; the framework scores a median above 20% as 5.

ROIC

5/5

ROIC of 21.7%: operating income of $2.05B divided by $9.41B of capital (total assets $11.18B minus current liabilities $1.77B), fiscal year to Dec 31, 2025, as filed in the 10-K (SEC EDGAR). The framework scores above 20% as 5.

Profit Margins

5/5

Net margin of 20.5%; the framework scores above 20% as 5; gross margin 36.0%, operating margin 28.5%.

Balance sheet & cash

Debt-to-Equity

3/5

Debt-to-equity of 0.81; the framework scores 0.8-1.5 as 3 (total debt $4.66B, total cash $563.00M).

Free Cash Flow

5/5

Free cash flow (operating cash flow minus capital expenditure): $540.00M (2022), $682.00M (2023), $977.00M (2024), $1.43B (2025). It rose every year; the framework scores that as 5.

Retained Earnings

5/5

Retained earnings, as filed in the 10-Ks (SEC EDGAR): $1.03B (2022), $1.72B (2023), $2.77B (2024), $4.09B (2025). It rose every year; the framework scores that as 5.

Valuation models

Graham IV

3/5

IV = EPS x (8.5 + 2g) x (4.4 / Y) = $4.64 x (8.5 + 2 x 20.0) x (4.4 / 4.5) = $220.04 (EPS CAGR 42.4% capped at 20%). Current price $220.96; price is 0.4% above the model value.

DCF Value

1/5

FCF/share = $2.984, stage 1 growth = 11.5% for 5 years, terminal growth = 3%, discount rate = 10%. Stage 1 PV = $15.54, PV of terminal value = $46.98, DCF value = $62.52. Current price $220.96; price is 253.4% above the model value.

Margin of Safety

2/5

Graham value $220.04 (price is 0.4% above the model value); DCF value $62.52 (price is 253.4% above the model value).

Price-to-Book

1/5

P/B of 15.42; the framework scores above 5.0 as 1.

Business quality

Moat Evidence

Not scored

A moat (a brand, a network, switching costs, patents, scale, a licence) is not a number in the filings, so Valerius doesn’t score it. Below are the figures and the words moat analysis starts from, from the company’s own 10-K filings. The conclusion is yours.

Return on capital, each year

Above 15% in 2 of 10 years (2016-2025); lowest 3.0%, highest 21.7%.

Gross margin, each year

Not reported: the filings don’t state a gross profit or cost of revenue figure, as is common for oil and gas companies, banks and insurers.

Competition, in the company’s own words · 10-K filed Feb 12, 2026

The Company’s segments - Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels - are subject to substantial and intense competition in the markets they serve. Although Howmet believes its advanced technology, manufacturing processes, and experience provide advantages to Howmet’s customers, such as high quality and superior mechanical properties that meet the Company’s customers’ most stringent

The opening of the company’s “Competitive Conditions” section in its 10-K, quoted word for word, not summarized or edited. It is the company’s own description, not Valerius’s view, and may include the company’s expectations. Open the filing.

Return on capital = operating income / (total assets − current liabilities), the ROIC row’s definition; 15% is the framework’s return threshold. Gross margin = gross profit / revenue. Both from each year’s 10-K via SEC EDGAR. Moat analysis commonly looks at whether returns and margins held up over many years. These figures don’t say whether the company has an advantage, what it is, or whether it will last.

Capital Allocation

5/5

Capital allocation, 2022-2025: dividends or buybacks paid in every year (pass); $2.31B paid out against $3.63B of free cash flow (pass); total debt $4.28B to $3.21B, down 24.9%, 1.4x EBITDA (pass: not up more than 10%); shares outstanding 0.41B to 0.40B, down 2.6% (pass). 4 of 4 tests passed; the framework scores that as 5.

Filings

Company notices to the SEC

Not scored

Three kinds of event the company reported to the SEC in the last 5 years, from its filings on SEC EDGAR.

These are events the company reported to the SEC. An auditor change or a late filing can have many causes; each date links to the filing, where the company explains it. Valerius does not score these.

How the Graham and DCF values were calculated

  Graham Formula:
    IV = EPS x (8.5 + 2g) x (4.4 / Y)
    EPS = $4.64, g = 20.0%, Y = 4.5
    g capped at 20.0% (3-year EPS CAGR was 42.4%)
    IV = $220.04
    Current price $220.96 vs Graham value $220.04 — price is 0.4% above the model value.

  DCF:
    FCF/share = $2.984
    Stage 1 growth = 11.5% for 5 years | terminal growth = 3.0% | discount rate = 10.0%
      Y1: $3.327 → PV $3.024
      Y2: $3.709 → PV $3.066
      Y3: $4.136 → PV $3.107
      Y4: $4.612 → PV $3.150
      Y5: $5.142 → PV $3.193
    Stage 1 PV sum = $15.54
    Terminal value at end of Y5 = $75.66
    PV of terminal value = $46.98
    DCF value = $62.52
    Current price $220.96 vs DCF value $62.52 — price is 253.4% above the model value.

Data from yfinance summary figures and financial statements, and from the company’s 10-K filings via SEC EDGAR; computed at a price of $220.96. Every score is calculated from the figures by the framework’s fixed rules, and the explanation beside it is generated from the same figures: Graham value, DCF value, margin of safety, ROIC, profit margins, debt-to-equity, price-to-book, EPS trend, ROE trend, free cash flow, retained earnings and capital allocation. No AI is involved in this scorecard. The moat is shown as evidence, without a score. Read each score with the figures beside it. Intrinsic value calculations are model outputs based on stated assumptions, not predictions.

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