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Huntington Ingalls Industries (HII)
NYSE:HII
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Huntington Ingalls
(NYSE:HII)66Neutral
Positive Factors
Mission Technology Performance
HII’s Mission Technology’s business outperformed expectations, with a funded BtB of 2.2x and ~$11bn of potential total awarded contract value.
Outsourcing Strategy
HII is taking steps to improve execution by increasing outsourcing and focusing on hiring experienced individuals.
Negative Factors
Execution Challenges
HII’s stock fell significantly after reporting earnings, highlighting concerns about its execution challenges.
Financial Outlook
Huntington Ingalls Industries disappointed investors with an adj. EPS miss and a downward revision of its 2024 outlook.
Shipbuilding Performance
Shipbuilding continues to underperform expectations as a result of unfavorable pre-COVID contracts, an inexperienced workforce, and supply chain delays.
Huntington Ingalls (HII) vs. S&P 500 (SPY)
Market Cap
$6.76B
Dividend Yield3.08%
Average Volume (3M)863.68K
Price to Earnings (P/E)12.3
Beta (1Y)1.03
Revenue Growth0.71%
EPS Growth-18.39%
CountryUS
Employees44,000
SectorIndustrials
Sector Strength66
IndustryAerospace & Defense
Share Statistics
EPS (TTM)13.96
Shares Outstanding39,235,570
10 Day Avg. Volume1,102,193
30 Day Avg. Volume863,677
Financial Highlights & Ratios
PEG Ratio0.34
Price to Book (P/B)N/A
Price to Sales (P/S)0.59
Price to Cash Flow (P/CF)4.30
P/FCF Ratio5.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$186.25Price Target Upside-3.79% Downside
Rating ConsensusHold
Number of Analyst Covering8
Huntington Ingalls Business Overview & Revenue Model
Company DescriptionHuntington Ingalls Industries, Inc. engages in the shipbuilding business. It operates through the following business segments: Ingalls, Newport News, and Technical Solutions. The Ingalls segment develops and constructs non-nuclear ships, assault ships, and surface combatants. The Newport News segment designs, builds, and maintains nuclear-powered ships which include aircraft carriers and submarines. The Technical Solutions segment provides professional services, including fleet support, integrated missions solutions, nuclear and environmental, and oil and gas services. The company was founded on August 4, 2010 and is headquartered in Newport News, VA.
How the Company Makes MoneyHuntington Ingalls Industries generates revenue primarily through government contracts, particularly with the U.S. Department of Defense, for the construction and maintenance of military ships. The company's Ingalls Shipbuilding and Newport News Shipbuilding segments contribute significantly to its income by delivering high-value, long-term projects such as aircraft carriers and submarines. Additionally, the Technical Solutions segment provides a diverse range of services, including fleet support, unmanned systems, and information technology, which further contribute to the company's earnings. HII's financial performance is supported by strategic partnerships and collaborations across the defense industry, enhancing its capabilities and market reach.
Huntington Ingalls Financial Statement Overview
Summary
Huntington Ingalls displays solid financial health with consistent revenue growth and strong cash flows. However, declining EBIT and EBITDA margins and a moderate debt level present challenges that could impact long-term stability.Income Statement
Huntington Ingalls has demonstrated a solid financial performance with consistent revenue growth over the years. The company's gross profit margin remains strong, indicating efficient cost management. However, there is a noticeable decline in EBIT and EBITDA margins compared to previous years, suggesting potential cost pressures or pricing challenges.85
Very Positive
Balance Sheet
The company's balance sheet reflects a moderate debt-to-equity ratio, indicating a balanced leverage position. The return on equity is commendable, showcasing effective utilization of shareholder funds. However, the equity ratio suggests a reliance on liabilities, which could pose risks if not managed carefully.70
Positive
Cash Flow
Huntington Ingalls has shown strong operating cash flow generation, which exceeds net income, indicating good cash conversion. The free cash flow growth rate is positive, although it fluctuated in previous years. The company's ability to maintain positive free cash flow amid capital expenditures is a positive indicator of financial health.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 11.54B | 11.45B | 10.68B | 9.52B | 9.36B | Gross Profit |
| 1.45B | 1.65B | 1.44B | 1.37B | 1.67B | EBIT |
| 535.00M | 781.00M | 773.00M | 513.00M | 799.00M | EBITDA |
| 535.00M | 1.29B | 1.18B | 1.00B | 1.15B | Net Income Common Stockholders |
| 550.00M | 681.00M | 579.00M | 544.00M | 696.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 831.00M | 430.00M | 467.00M | 627.00M | 512.00M | Total Assets |
| 12.14B | 11.21B | 10.86B | 10.63B | 8.16B | Total Debt |
| 3.41B | 2.67B | 3.15B | 3.49B | 1.84B | Net Debt |
| 2.58B | 2.24B | 2.68B | 2.87B | 1.33B | Total Liabilities |
| 7.47B | 7.12B | 7.37B | 7.82B | 6.26B | Stockholders Equity |
| 4.67B | 4.09B | 3.49B | 2.81B | 1.90B |
| Cash Flow | Free Cash Flow | |||
| 26.00M | 678.00M | 482.00M | 429.00M | 740.00M | Operating Cash Flow |
| 393.00M | 970.00M | 766.00M | 760.00M | 1.09B | Investing Cash Flow |
| -348.00M | -236.00M | -268.00M | -1.95B | -759.00M | Financing Cash Flow |
| 356.00M | -771.00M | -658.00M | 1.31B | 103.00M |
Huntington Ingalls Technical Analysis
Positive
193.59
Price Trends
184.41
Positive
198.34
Negative
226.69
Negative
Market Momentum
-1.85
Negative
62.51
Neutral
55.64
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HII, the sentiment is Positive. The current price of 193.59 is above the 20-day moving average (MA) of 171.09, above the 50-day MA of 184.41, and below the 200-day MA of 226.69, indicating a neutral trend. The MACD of -1.85 indicates Negative momentum. The RSI at 62.51 is Neutral, neither overbought nor oversold. The STOCH value of 55.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HII.
Huntington Ingalls Risk Analysis
Huntington Ingalls disclosed 32 risk factors in its most recent earnings report. Huntington Ingalls reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Huntington Ingalls Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $67.14B | 16.37 | 27.75% | 1.74% | 4.44% | 110.33% | |
75 Outperform | $67.80B | 18.40 | 17.44% | 2.26% | 12.88% | 13.78% | |
74 Outperform | $105.65B | 20.12 | 81.04% | 2.84% | 5.14% | -19.14% | |
71 Outperform | $39.00B | 26.29 | 7.85% | 2.24% | 9.82% | 22.33% | |
66 Neutral | $6.76B | 12.34 | 11.79% | 3.08% | 0.71% | -18.39% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
37 Underperform | $119.19B | ― | -162.23% | ― | -14.49% | -399.90% |
* Industrials Sector Average
Performance Comparison
HII
Huntington Ingalls
193.59
-93.32
-32.53%
BA
Boeing
163.16
-37.84
-18.83%
GD
General Dynamics
262.96
-5.32
-1.98%
LHX
L3Harris Technologies
210.53
-0.75
-0.35%
LMT
Lockheed Martin
460.42
38.02
9.00%
NOC
Northrop Grumman
474.20
20.93
4.62%
Huntington Ingalls Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -0.24% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
While Huntington Ingalls Industries, Inc. has shown strong contract acquisition and growth in its Mission Technologies segment, it faces significant challenges in shipbuilding margins, supply chain issues, and negative financial adjustments. The company is optimistic about future revenue growth, but current operational and financial challenges are substantial.Highlights
Strong Contract Awards
In 2024, the company secured $12 billion in new awards, resulting in a year-end backlog of $49 billion, with $27 billion funded. This reflects strong demand for Huntington Ingalls Industries' products and services.
Mission Technologies Growth
Mission Technologies achieved a 9% revenue growth year over year, with significant contract wins, including a $6.7 billion contract with the US Air Force. This segment's performance aligns with national security needs.
Operational Milestones in Shipbuilding
Significant milestones were achieved in shipbuilding, including the delivery of the USS Richard M. McCool Jr. and the launch of LPD 30 Harrisburg. The company continues to progress on the DDG and Virginia class programs.
Revenue and Earnings Growth Expectation
The company anticipates growing to $15 billion in annual revenue by 2030, with associated margin expansion and free cash flow growth.
Hiring and Workforce Development
The company exceeded its hiring goal of 6,000 craft personnel in 2024, with plans to continue increasing employment at its Charleston operations.
Lowlights
Decline in Fourth Quarter Revenues
Fourth quarter revenues of $3 billion decreased by approximately 5% compared to the same period last year, driven by lower year-over-year revenue across all segments.
Challenges in Shipbuilding Margins
Shipbuilding margins declined due to lower performance on Virginia class submarines and aircraft carrier construction, with a shipbuilding margin of 3.6% in the fourth quarter of 2024.
COVID-Related Labor and Supply Chain Challenges
Residual COVID-related challenges in labor, productivity, and supply chain continue to impact operations, with high attrition rates and supply chain inefficiencies.
Cash Flow Challenges
Free cash flow for 2024 was only $40 million, with high capital expenditures and cash taxes impacting overall cash generation.
Negative Adjustments in Financial Performance
Segment operating income and net earnings declined significantly compared to 2023, with net cumulative adjustments for the year being negative $120 million.
Company Guidance
During the Huntington Ingalls Industries, Inc. Fourth Quarter 2024 Conference Call, the company provided guidance on several key metrics. Huntington Ingalls Industries anticipates securing over $50 billion in contract awards over the next 24 months, while aiming to grow annual revenue to $15 billion by 2030 with margin expansion. For the fiscal year 2025, the company expects shipbuilding revenues between $8.9 billion and $9.1 billion, with margins ranging from 5.5% to 6.5%. Additionally, Mission Technologies is projected to generate revenues between $2.9 billion and $3.1 billion, with operating margins of 4% to 4.5% and EBITDA margins between 8% and 8.5%. The free cash flow outlook for 2025 is estimated to be between $300 million and $500 million. The guidance rests upon achieving operational improvements, including a 20% year-over-year improvement in workforce strategies, a $250 million annualized cost reduction target, and securing new contracts that reflect current economic conditions.Huntington Ingalls Corporate Events
Executive/Board Changes
Huntington Ingalls Announces Key Leadership Changes
Neutral
Nov 7, 2024
Huntington Ingalls Industries (HII), the largest military shipbuilder in the U.S., has announced leadership changes with Kari Wilkinson set to become the new president of Newport News Shipbuilding, effective January 2025. Wilkinson, who has successfully led Ingalls Shipbuilding, will succeed Jennifer Boykin as she retires. Concurrently, Brian Blanchette will take over Wilkinson’s role at Ingalls Shipbuilding, bringing over two decades of experience to his new position. These transitions aim to continue HII’s legacy of delivering critical shipbuilding capabilities vital to national security.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.