Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Howmet Aerospace (NYSE:HWM). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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How Fast Is Howmet Aerospace Growing Its Earnings Per Share?

In the last three years Howmet Aerospace's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Howmet Aerospace's EPS shot up from US$1.85 to US$2.85; a result that's bound to keep shareholders happy. That's a impressive gain of 54%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Howmet Aerospace shareholders can take confidence from the fact that EBIT margins are up from 18% to 22%, and revenue is growing. Both of which are great metrics to check off for potential growth.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Check out our latest analysis for Howmet Aerospace

Fortunately, we've got access to analyst forecasts of Howmet Aerospace's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Howmet Aerospace Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$50b company like Howmet Aerospace. But we do take comfort from the fact that they are investors in the company. Notably, they have an enviable stake in the company, worth US$569m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. Well, based on the CEO pay, you'd argue that they are indeed. Our analysis has discovered that the median total compensation for the CEOs of companies like Howmet Aerospace, with market caps over US$8.0b, is about US$14m.

The Howmet Aerospace CEO received US$7.3m in compensation for the year ending December 2023. That comes in below the average for similar sized companies and seems pretty reasonable. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Howmet Aerospace To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Howmet Aerospace's strong EPS growth. If you need more convincing beyond that EPS growth rate, don't forget about the reasonable remuneration and the high insider ownership. This may only be a fast rundown, but the key takeaway is that Howmet Aerospace is worth keeping an eye on. It is worth noting though that we have found 1 warning sign for Howmet Aerospace that you need to take into consideration.

Although Howmet Aerospace certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of companies that not only boast of strong growth but have strong insider backing.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.