Howmet vs. General Dynamics: Which Aerospace & Defense Stock is a Smart Buy?

Howmet Aerospace Inc. HWM and General Dynamics Corporation GD are two powerhouses operating at the heart of the aerospace and defense industry. Howmet is well-known for its highly engineered solutions for customers across the transportation and aerospace industries. Meanwhile, General Dynamics provides a broad portfolio of products and services across several industries, including aerospace and defense, marine, land combat vehicles, as well as weapons systems and munitions.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. But which one is a better investment today? Let’s take a closer look at their fundamentals, growth prospects and challenges to make an informed choice.The Case for HowmetHowmet is witnessing solid momentum in its commercial aerospace market. With growing passenger traffic in the global aviation market, wide-body aircraft demand has picked up, leading to an increase in OEM spending. This has consistently improved demand for the aircraft parts and products that the company provides.HWM’s revenues from the commercial aerospace market increased 8% year over year in second-quarter 2025, constituting more than half of its business. This followed revenue growth of 9% from the market in the first quarter. The sustained strength was attributed to new, more fuel-efficient aircraft with reduced carbon emissions and increased spare demand for engines.While the commercial aerospace market has remained the major driver for the company, the defense side of the industry has also been witnessing positive momentum, cushioned by steady government support. The company has been witnessing robust orders for engine spares for the F-35 program and spares and new builds for legacy fighters. In the second quarter, revenues from the defense aerospace market surged 21% year over year, constituting 17% of the company’s revenues. This followed revenue growth of 19% from the defense aerospace market in the first quarter.Howmet’s measures to reward shareholders are also encouraging. In the first six months of 2025, the company paid dividends of $83 million and repurchased shares worth $300 million. In August 2025, its quarterly dividend was hiked 20% to 12 cents per share, marking its second dividend hike this year. Exiting the second quarter, HWM’s total share repurchase authorization available was $1.8 billion.However, persistent softness in the commercial transportation market is affecting the company’s performance. In the second quarter, revenues from the commercial transportation market declined 4% on a year-over-year basis, following a 14% decline in the first quarter. Lower demand in the commercial transportation markets due to decreased OEM builds is expected to continue in 2025, which will likely affect the performance of its Forged Wheels segment.The Case for General DynamicsAlong with its well-established domestic market, General Dynamics enjoys significant overseas opportunities across multiple nations, particularly in Europe, for its Land Systems unit’s products. In the first six months of 2025, it witnessed robust demand for its combat system products, with particular strength in Europe.The U.S. fiscal budgets have played a key role in the growth of General Dynamics’ Marine Systems business. Notably, in May 2025, a White House report published that U.S. President Trump proposed an increase in the nation’s defense spending (to $1.01 trillion) for fiscal 2026. In particular, this proposal advocates for expanding U.S. shipbuilding capacity by investing in 19 new Navy battle force ships while maintaining 287 ships across key platforms. This should bode well for GD with its strong presence in the defense shipbuilding industry.Exiting the second quarter, General Dynamics had a robust backlog of $103.68 billion, driven by a strong order inflow. The estimated contract value, which combines the total backlog with the potential contract value, totaled $161.16 billion at the end of the quarter. The strength of the order flow was driven by strong demand across the company’s product and services portfolio.On the product development front, General Dynamics’ Gulfstream Aerospace unit is currently working on its longest-range aircraft, the G800 and the large-cabin G400 jet. In April 2025, the G800 received type certification from the U.S. Federal Aviation Administration (FAA) and the European Union Aviation Safety Agency (EASA).To this end, the company commenced G800 deliveries in August 2025 and is expected to deliver about 13 G800s by 2025-end. Its G400 is expected to enter service in 2025, pending FAA certification. Such product innovations should further strengthen this shipbuilder’s footprint in the business aviation market going ahead.This apart, GD’s shareholder-friendly policies raise its attractiveness. In the first six months of 2025, it paid dividends of $785 million and repurchased shares worth $600 million. Also, in March 2025, it hiked its quarterly dividend by 5.6% to $1.50 per share.Price PerformanceIn the past three months, Howmet shares have gained 5%, while General Dynamics stock has risen 13.3%.Image Source: Zacks Investment ResearchHow Does the Zacks Consensus Estimate Compare for HWM & GD?The Zacks Consensus Estimate for HWM’s 2025 sales is $8.2 billion, implying year-over-year growth of 10.1%. The consensus estimate for its earnings is pegged at $3.59 per share, suggesting an increase of 33.5%.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for GD’s 2025 sales is approximately $51.2 billion, indicating growth of 7.3% year over year. Estimates for its earnings are pegged at $15.24 per share, reflecting an increase of 11.8%.Image Source: Zacks Investment ResearchGD’s Valuation Attractive Than HowmetGD is trading at a forward 12-month price-to-earnings ratio of 20.14X, above its median of 17.72X over the last three years. Howmet’s forward earnings multiple sits at 46.75X, much higher than its median of 29.51X over the same time frame.Image Source: Zacks Investment ResearchConclusionHowmet’s strength in the commercial and defense aerospace markets has been diluted by the persistent weakness in its transportation market. Also, HWM’s expensive valuation warrants a cautious approach for existing investors.In contrast, General Dynamics’s robust momentum in the aerospace and marine markets, solid backlog level and product development initiatives bode well for impressive growth in the quarters ahead. Additionally, GD’s attractive valuation is more appealing, and its upwardly revised estimates instill confidence. Given these factors, GD seems a better pick for investors than HWM currently. While General Dynamics carries a Zacks Rank #2 (Buy), Howmet currently has a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Dynamics Corporation (GD): Free Stock Analysis Report Howmet Aerospace Inc. (HWM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks