Analyzing Howmet Aerospace (NYSE:HWM) and Carpenter Technology (NYSE:CRS)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Carpenter Technology	16.96%	26.46%	15.02%
Howmet Aerospace	20.52%	33.91%	15.11%

Dividends

Carpenter Technology pays an annual dividend of $0.80 per share and has a dividend yield of 0.1%. Howmet Aerospace pays an annual dividend of $0.56 per share and has a dividend yield of 0.2%. Carpenter Technology pays out 7.6% of its earnings in the form of a dividend. Howmet Aerospace pays out 12.1% 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 raised its dividend for 5 consecutive years. Howmet Aerospace is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

92.0% of Carpenter Technology shares are owned by institutional investors. Comparatively, 90.5% of Howmet Aerospace shares are owned by institutional investors. 2.9% of Carpenter Technology shares are owned by insiders. Comparatively, 0.9% of Howmet Aerospace shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Carpenter Technology has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Howmet Aerospace has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Carpenter Technology and Howmet Aerospace, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carpenter Technology	0	1	8	1	3.00
Howmet Aerospace	0	3	17	0	2.85

Carpenter Technology currently has a consensus price target of $577.25, indicating a potential upside of 7.26%. Howmet Aerospace has a consensus price target of $315.67, indicating a potential upside of 12.28%. Given Howmet Aerospace’s higher probable upside, analysts plainly believe Howmet Aerospace is more favorable than Carpenter Technology.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carpenter Technology	$3.12 billion	8.56	$529.80 million	$10.52	51.16
Howmet Aerospace	$9.12 billion	12.34	$1.51 billion	$4.64	60.59

Howmet Aerospace has higher revenue and earnings than Carpenter Technology. Carpenter Technology 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 Carpenter Technology on 11 of the 18 factors compared between the two stocks.

About Carpenter Technology

Carpenter Technology Corporation engages in the manufacture, fabrication, and distribution of specialty metals in the United States, Europe, the Asia Pacific, Mexico, Canada, and internationally. It operates in two segments, Specialty Alloys Operations and Performance Engineered Products. The company offers specialty alloys, including titanium alloys, powder metals, stainless steels, alloy steels, and tool steels, as well as additives, and metal powders and parts. It serves to aerospace, defense, medical, transportation, energy, industrial, and consumer markets. The company was founded in 1889 and is headquartered in Philadelphia, Pennsylvania.

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.