Howmet vs. GE Aerospace: Which Aerospace & Defense Stock Should You Bet On?

Howmet Aerospace Inc. HWM and GE Aerospace GE are two prominent names operating in the aerospace and defense industry. As rivals, both companies are engaged in producing highly engineered aircraft components for commercial and military aircraft in the United States and internationally.

Both companies have been enjoying significant growth opportunities in the aerospace and defense space on account of the improving air traffic trend and the expansionary U.S. budgetary policy in the past couple of years. Let’s take a closer look at their fundamentals, growth prospects and challenges.

The Case for Howmet

The strongest driver of Howmet’s business at the moment is the commercial aerospace market. Revenues from the commercial aerospace market increased 28% year over year in the second quarter of 2026, constituting 53% of its business. The sustained strength was attributed to increasing demand for engine spares and a record backlog for new, more fuel-efficient aircraft with reduced carbon emissions. Also, with the production recovery of the Boeing 737 MAX aircraft and healthy build rates at Airbus for A320 (narrowbody) and A350 (widebody) aircraft, Howmet is expected to witness strong demand for its products in the market.

Howmet has also been witnessing strong momentum in the defense aerospace industry, cushioned by steady government support. Robust orders for engine spares for the F-35 program and spares for other legacy fighters are augmenting HWM’s performance. In the second quarter, revenues from the defense aerospace market surged 11% year over year, constituting 15% of the company’s revenues. The company is also expanding its efforts on new programs, particularly in the drone and collaborative combat aircraft space.

In April 2026, HWM completed the acquisition of Stanley Black & Decker’s SWK business unit, Consolidated Aerospace Manufacturing LLC (“CAM”), for $1.8 billion. CAM’s well-known brands, engineering expertise and strong customer relationships strengthened its aerospace fastening solutions portfolio.

HWM’s measures to reward shareholders are encouraging, too. In the first six months of 2026, the company paid dividends of $97 million, and in July 2026, it hiked its dividend by 17% to 14 cents per share (annually: 56 cents). On a year-to-date basis through July, HWM repurchased shares worth $800 million. As of Aug. 6, 2026, Howmet’s total share repurchase authorization available was $697 million.

However, rising costs and operating expenses remain concerning. In second-quarter 2026, its cost of goods sold increased 16.9% to $1.6 billion, while selling, general, administrative and other expenses surged 66.3% to $148 million.

The Case for GE Aerospace

GE Aerospace continues to experience strong orders for LEAP, GEnx & GE9X engines and services, supported by growth in air traffic, fleet renewal and expansion activities. The company is also making progress under its FLIGHT DECK lean model, including supplier improvements that contributed to the Commercial Engines & Services segment’s growth. In the second quarter of 2026, revenues from the segment increased 27% year over year to $9.73 billion.

The gain was driven by services growth of 26%, with internal shop visit revenues up 25%. Spare parts revenues increased more than 25%, reflecting robust aftermarket demand. Equipment revenues in the segment advanced 30%, supported by unit volume growth of 26%, including a 24% increase in LEAP deliveries. Total orders in the Commercial Engines & Services segment rose 18% year over year to $12.93 billion.

The company is also witnessing strong momentum in the Defense & Propulsion Technologies segment. After recording growth of 19% in the first quarter, segment revenues rose 16% year over year in the second quarter. This growth was fueled by increasing demand for GE’s propulsion and additive technologies, critical aircraft systems and aftermarket services in the defense sector.

GE Aerospace’s commitment to reward its shareholders through dividends and share buybacks is encouraging. In the first half of 2026, it bought back shares for $4.2 billion and paid dividends of $873 million, up 26.9% year over year, to its shareholders. It raised its dividend by 30.6% to 36 cents per share in February 2026. GE expects to generate a free cash flow of $8.9-$9.2 billion in 2026, much higher than the $8.0-$8.4 billion guided previously.

However, the company has been dealing with high cost of sales and operating expenses. In the second quarter, its cost of sales surged 26.7% year over year, while selling, general and administrative expenses increased 10.9%. In the quarter, GE’s operating profit margin contracted 130 basis points to 21.7%. The rising debt level remains another concern. Exiting the second quarter, GE’s total borrowings were $19.2 billion.

Price Performance

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In the past year, Howmet shares have surged 53.7%, while GE Aerospace stock has gained 24.5%.

The Zacks Consensus Estimate for HWM & GE

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The Zacks Consensus Estimate for HWM’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 22.7% and 38.7%, respectively. HWM’s EPS estimates for both 2026 and 2027 have increased over the past 60 days.

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The Zacks Consensus Estimate for GE’s 2026 sales and EPS indicates year-over-year growth of 19.7% and 23.4%, respectively. GE’s EPS estimates have been trending northward over the past 60 days for 2026 and 2027.

Valuation Comparison

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HWM is trading at a forward 12-month price-to-earnings ratio of 45.92X, above its median of 38.47X over the last three years. GE’s forward earnings multiple sits at 39.82X, higher than its median of 37.33X over the same time frame.

Final Take

GE Aerospace’s strength in commercial and defense aerospace markets, driven by solid build rates and a robust defense budget, bodes well for growth. However, GE's market strength has been dented by rising operating expenses and high debt, which might affect its margins and profitability.

In contrast, Howmet’s market leadership position and strength in commercial and defense aerospace markets provide it with a competitive advantage to leverage the long-term demand prospects in the aerospace market. Despite its steeper valuation, HWM holds robust prospects due to strong estimates, stock price appreciation and healthy fundamentals.

Given these factors, HWM seems to be a better pick for investors than GE currently. While Howmet sports a Zacks Rank #1 (Strong Buy), GE currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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