Did Business Growth Power Howmet Aerospace's (NYSE:HWM) Share Price Gain of 114%?

Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Howmet Aerospace Inc. (NYSE:HWM) share price has soared 114% return in just a single year. Meanwhile the share price is 2.6% higher than it was a week ago. It is also impressive that the stock is up 51% over three years, adding to the sense that it is a real winner.

View our latest analysis for Howmet Aerospace

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year, Howmet Aerospace actually saw its earnings per share drop 28%.

So we don't think that investors are paying too much attention to EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We doubt the modest 0.2% dividend yield is doing much to support the share price. Howmet Aerospace's revenue actually dropped 31% over last year. So the fundamental metrics don't provide an obvious explanation for the share price gain.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

Howmet Aerospace is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

We're pleased to report that Howmet Aerospace rewarded shareholders with a total shareholder return of 114% over the last year. That's including the dividend. That's better than the annualized TSR of 26% over the last three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Howmet Aerospace is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

We will like Howmet Aerospace better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.