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HWM

Howmet Aerospace Inc – Alumina Refining and Primary Aluminum Production
Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company's primary businesses focus on jet engine components, aerospace fastening systems, and titanium structural parts necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged wheels for commercial transportation. With nearly 1,200 granted and pending patents, the Company's differentiated technologies enable lighter, more fuel-efficient aircraft to operate with a lower carbon footprint. In 2019, the businesses of Howmet Aerospace reported annual revenue of over $7 billion.
Analysis Results
Intrinsic Value $18.52
Latest Price $39.08
Relative Value 111% overvalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of -4.7%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 8.5%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -4.7%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 0.659 0.608
2023 0.628 0.534
2024 0.599 0.469
2025 0.571 0.413
2026 0.544 0.362
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 8.59 billion. This corresponds to a present value of 5.28 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 2.39 billion. Adding in the terminal value gives a total present value of 7.66 billion.

There are presently 414.0 million outstanding shares, so the intrinsic value per share is 18.52.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 2,737,000,000
Current Cash 720,000,000
Current Liabilities 1,253,000,000
Current Debt 5,000,000
Non-Cash Working Capital (NCWC) 769,000,000
Change in NCWC -9,000,000
EBIT 838,000,000
Tax Provision 66,000,000
Depreciation and Amortization 270,000,000
Capital Expenditure -199,000,000
Unlevered Free Cash Flow 729,296,296
Current Assets 3,672,000,000
Current Cash 1,610,000,000
Current Liabilities 1,660,000,000
Current Debt 376,000,000
Non-Cash Working Capital (NCWC) 778,000,000
Change in NCWC -324,000,000
EBIT 808,000,000
Tax Provision -40,000,000
Depreciation and Amortization 338,000,000
Capital Expenditure -267,000,000
Unlevered Free Cash Flow 555,000,000
Current Assets 5,842,000,000
Current Cash 1,648,000,000
Current Liabilities 4,126,000,000
Current Debt 1,034,000,000
Non-Cash Working Capital (NCWC) 1,102,000,000
Change in NCWC -116,000,000
EBIT 1,655,000,000
Tax Provision 105,000,000
Depreciation and Amortization 536,000,000
Capital Expenditure -586,000,000
Unlevered Free Cash Flow 1,186,782,608
Current Assets 6,581,000,000
Current Cash 2,277,000,000
Current Liabilities 3,520,000,000
Current Debt 434,000,000
Non-Cash Working Capital (NCWC) 1,218,000,000
Change in NCWC -224,000,000
EBIT 1,334,000,000
Tax Provision 226,000,000
Depreciation and Amortization 576,000,000
Capital Expenditure -768,000,000
Unlevered Free Cash Flow 570,668,202
Current Assets 6,378,000,000
Current Cash 2,150,000,000
Current Liabilities 2,824,000,000
Current Debt 38,000,000
Non-Cash Working Capital (NCWC) 1,442,000,000
Change in NCWC 122,000,000
EBIT 1,210,000,000
Tax Provision 544,000,000
Depreciation and Amortization 551,000,000
Capital Expenditure -596,000,000
Unlevered Free Cash Flow 743,000,000
Current Assets 5,892,000,000
Current Cash 1,863,000,000
Current Liabilities 2,749,000,000
Current Debt 40,000,000
Non-Cash Working Capital (NCWC) 1,320,000,000
Change in NCWC 438,000,000
EBIT 981,000,000
Tax Provision 1,476,000,000
Depreciation and Amortization 1,132,000,000
Capital Expenditure -1,125,000,000
Unlevered Free Cash Flow -50,000,000
Current Assets 7,953,000,000
Current Cash 1,919,000,000
Current Liabilities 5,211,000,000
Current Debt 59,000,000
Non-Cash Working Capital (NCWC) 882,000,000
Change in NCWC -52,000,000
EBIT 1,879,000,000
Tax Provision 445,000,000
Depreciation and Amortization 1,280,000,000
Capital Expenditure -1,180,000,000
Unlevered Free Cash Flow 1,482,000,000
Current Assets 8,269,000,000
Current Cash 1,877,000,000
Current Liabilities 5,541,000,000
Current Debt 83,000,000
Non-Cash Working Capital (NCWC) 934,000,000
Change in NCWC 795,000,000
EBIT 2,093,000,000
Tax Provision 320,000,000
Depreciation and Amortization 1,372,000,000
Capital Expenditure -1,219,000,000
Unlevered Free Cash Flow 1,693,394,366
Current Assets 6,969,000,000
Current Cash 1,437,000,000
Current Liabilities 6,105,000,000
Current Debt 712,000,000
Non-Cash Working Capital (NCWC) 139,000,000
Change in NCWC -276,000,000
EBIT 1,057,000,000
Tax Provision 428,000,000
Depreciation and Amortization 1,422,000,000
Capital Expenditure -1,193,000,000
Unlevered Free Cash Flow 1,010,000,000
Current Assets 7,700,000,000
Current Cash 1,861,000,000
Current Liabilities 5,942,000,000
Current Debt 518,000,000
Non-Cash Working Capital (NCWC) 415,000,000
Change in NCWC -77,000,000
EBIT 532,000,000
Tax Provision 162,000,000
Depreciation and Amortization 1,462,000,000
Capital Expenditure -1,261,000,000
Unlevered Free Cash Flow 390,000,000

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