Huntington Ingalls (HII) AI Stock Analysis

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Huntington Ingalls

(NYSE:HII)

Rating:71Outperform

Price Target:―

Huntington Ingalls' overall stock score reflects its stable financial performance, supported by solid profitability and a healthy balance sheet. Positive momentum in technical indicators boosts the score, but challenges in cash flow and revenue growth, along with shipbuilding delays, suggest caution. The stock's valuation is reasonable, and strategic initiatives could enhance future growth, balancing the risks and opportunities.

Positive Factors

Funding Improvements

Shipbuilding funding prospects have improved, which may mitigate the potential for large, negative charges for some time.

Operational Progress

HII's new SC production facility is online and produced a carrier unit for NNS, indicating operational progress.

Negative Factors

Execution Challenges

HII's stock fell significantly after reporting earnings, highlighting concerns about its execution challenges.

Profit Adjustments

Shipbuilding problems linger with negative profit adjustments driven by labor and supply chain bottlenecks.

Supply Chain Delays

CVN-80 had a negative EAC due to a supply chain delay that won't be resolved until Q3.

Huntington Ingalls (HII) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$8.95B

Dividend Yield2.37%

Average Volume (3M)672.79K

Price to Earnings (P/E)16.4

Beta (1Y)0.95

Revenue Growth-1.04%

EPS Growth-21.80%

CountryUS

Employees44,000

SectorIndustrials

Sector Strength90

IndustryAerospace & Defense

Share Statistics

EPS (TTM)3.79

Shares Outstanding39,239,136

10 Day Avg. Volume444,835

30 Day Avg. Volume672,794

Financial Highlights & Ratios

PEG Ratio-29.29

Price to Book (P/B)1.92

Price to Sales (P/S)0.00

P/FCF Ratio97.33

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$241.83

Price Target Upside7.72% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Huntington Ingalls Business Overview & Revenue Model

Company DescriptionHuntington Ingalls Industries (HII) is America's largest military shipbuilding company and a significant provider of professional services to partners in government and industry. Headquartered in Newport News, Virginia, HII operates through three primary divisions: Newport News Shipbuilding, Ingalls Shipbuilding, and Technical Solutions. The company specializes in designing, building, and maintaining nuclear and non-nuclear ships for the United States Navy and Coast Guard, as well as providing a wide range of technical and engineering services.

How the Company Makes MoneyHuntington Ingalls Industries generates revenue primarily through its shipbuilding contracts with the U.S. Department of Defense. HII's Newport News and Ingalls Shipbuilding divisions construct and overhaul aircraft carriers, submarines, and other naval vessels, which are substantial projects typically secured through long-term government contracts. These contracts often include fixed-price or cost-plus arrangements, providing a steady income stream. Additionally, HII's Technical Solutions division offers services such as fleet support, mission-driven innovative solutions, and nuclear and environmental services, further diversifying its revenue sources. Strategic partnerships with government agencies and industry stakeholders also play a crucial role in securing and executing these contracts, contributing significantly to the company's earnings.

Huntington Ingalls Financial Statement Overview

Summary

Huntington Ingalls demonstrates solid profitability with stable margins, a reasonable debt level, and improving equity position. Challenges exist in cash flow generation and revenue growth, indicating areas for strategic improvement.

Income Statement

Positive

Huntington Ingalls demonstrates strong profitability with a consistent gross profit margin around 25% to 26% over the years. The net profit margin has remained stable, observed at approximately 4.8% in the TTM. Revenue growth has been moderate, showing a compound annual growth rate of about 3.3% since 2020. EBIT and EBITDA margins suggest a stable operational performance, though there is a slight decline in EBIT margin in recent periods. Overall, the company shows steady profitability with room for improvement in revenue growth.

Balance Sheet

Positive

The balance sheet reflects moderate leverage with a debt-to-equity ratio of 0.71 in the TTM, showing a reduction from previous years. The equity ratio is improving, reaching 39.4% in the TTM, indicating an increasing equity base. Return on equity is solid at around 11.4% in the TTM, down from previous highs, suggesting some pressure on profitability. The company maintains a stable financial position, though continued focus on reducing debt could enhance financial flexibility.

Cash Flow

Positive

The cash flow analysis reveals a decline in operating cash flow over recent periods, with the operating cash flow to net income ratio dropping to 0.37 in the TTM. Free cash flow has fluctuated, showing negative growth, which impacts the free cash flow to net income ratio. Despite these fluctuations, the company is maintaining positive free cash flow. Improving operational efficiency could strengthen cash flow metrics further.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
11.46B	11.54B	11.45B	10.68B	9.52B	9.36B
	Gross Profit
1.47B	1.45B	1.65B	1.44B	1.37B	1.67B
	EBIT
530.00M	535.00M	781.00M	773.00M	513.00M	799.00M
	EBITDA
940.00M	1.06B	1.29B	1.18B	1.00B	1.15B
	Net Income Common Stockholders
546.00M	550.00M	681.00M	579.00M	544.00M	696.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
167.00M	831.00M	430.00M	467.00M	627.00M	512.00M
	Total Assets
12.10B	12.77B	11.21B	10.86B	10.63B	8.16B
	Total Debt
3.41B	3.41B	2.67B	3.15B	3.49B	1.84B
	Net Debt
3.24B	2.58B	2.24B	2.68B	2.87B	1.33B
	Total Liabilities
7.33B	7.47B	7.12B	7.37B	7.82B	6.26B
	Stockholders Equity
4.77B	4.67B	4.09B	3.49B	2.81B	1.90B
Cash Flow		Free Cash Flow
94.00M	26.00M	678.00M	482.00M	429.00M	740.00M
	Operating Cash Flow
200.00M	393.00M	970.00M	766.00M	760.00M	1.09B
	Investing Cash Flow
-476.00M	-348.00M	-236.00M	-268.00M	-1.95B	-759.00M
	Financing Cash Flow
433.00M	356.00M	-771.00M	-658.00M	1.31B	103.00M

Huntington Ingalls Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price224.49

Price Trends

50DMA

214.96

Positive

100DMA

199.97

Positive

200DMA

216.71

Positive

Market Momentum

MACD

3.28

Positive

RSI

51.69

Neutral

STOCH

35.16

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HII, the sentiment is Neutral. The current price of 224.49 is below the 20-day moving average (MA) of 228.78, above the 50-day MA of 214.96, and above the 200-day MA of 216.71, indicating a neutral trend. The MACD of 3.28 indicates Positive momentum. The RSI at 51.69 is Neutral, neither overbought nor oversold. The STOCH value of 35.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 3 New Risks

We utilize artificial intelligence, which could expose us to liability or adversely affect our business, especially if we are unable to compete effectively with others in adopting artificial intelligence. Q4, 2024

We are subject to investigations, claims, litigation, disputes and other legal proceedings that could ultimately be resolved against us. Q4, 2024

Our future success depends in part on our ability to increase our current and future shipbuilding capacity. If we are unable to do so, or to do so in a cost-effective manner, our business could be materially adversely affected. Q4, 2024

Huntington Ingalls Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GD	78 Outperform	$75.57B	19.54	18.23%	2.07%	14.11%	17.65%
LMT	77 Outperform	$111.48B	20.55	82.55%	2.74%	3.12%	-15.29%
LHX	76 Outperform	$43.15B	27.35	8.49%	2.01%	5.39%	36.86%
HII	71 Outperform	$8.95B	16.44	12.27%	2.37%	-1.04%	-21.80%
NOC	70 Outperform	$68.60B	18.76	25.41%	1.74%	0.61%	77.28%
Sector *	64 Neutral	$4.39B	11.81	5.17%	249.38%	3.98%	-12.17%
BA	52 Neutral	$156.58B	―	-162.23%	―	-9.15%	-406.76%

* Industrials Sector Average

Performance Comparison

HII

Huntington Ingalls

224.49

-22.30

-9.04%

Boeing

203.41

31.20

18.12%

General Dynamics

277.03

-13.43

-4.62%

LHX

L3Harris Technologies

239.19

20.57

9.41%

LMT

Lockheed Martin

470.45

15.31

3.36%

NOC

Northrop Grumman

472.88

13.57

2.95%

Huntington Ingalls Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: -2.54%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a mixed outlook. While there were positive developments in operational initiatives, strategic contract wins, and achievements in Mission Technologies, the company faced challenges with revenue decline, shipbuilding delays at Newport News, and negative free cash flow.

Q1-2025 Updates

Positive Updates

Operational Initiatives Progress

HII made progress against its goal of improving shipbuilding throughput by 20% year-over-year. Ingalls is largely on plan, while Newport News is slightly behind due to atypical weather and equipment delays.

Strategic Contract Wins

HII secured an agreement on the Block V FY 2024 II Built contract and is focusing on future contracts like Block VI and Columbia Build II. The company also announced a partnership with HD Hyundai Heavy Industries to explore collaborations in shipbuilding.

First Quarter Revenue

First quarter revenue was $2.7 billion with earnings per share of $3.79. The company ended the quarter with a backlog of $48 billion, of which $28 billion is funded.

Mission Technologies Achievements

The division delivered Lionfish small uncrewed undersea vehicles to the U.S. Navy and was selected to develop a laser counter-drone system for the U.S. Army. The division also surpassed 700 Remus Uncrewed underwater vehicles sold.

Negative Updates

Revenue Decline

First quarter revenues of approximately $2.7 billion decreased by 2.5% compared to the same period last year, attributed to declines at Newport News Shipbuilding, Ingalls Shipbuilding, and Mission Technologies.

Shipbuilding Delays

Newport News is modestly behind plan, with significant variance in CVN 80 due to late major equipment delivery, impacting the construction approach.

Negative Free Cash Flow

Free cash flow in the quarter was negative $462 million, attributed to timing of incentives and normal fluctuations in program receipts and disbursements.

Company Guidance

During the HII First Quarter 2025 Earnings Conference Call, several key metrics and guidance points were discussed. The company reported first quarter revenue of $2.7 billion and earnings per share of $3.79, with a backlog totaling $48 billion, of which $28 billion is funded. HII aims to achieve $250 million in annualized cost reductions by the end of the year. The company is focused on improving shipbuilding throughput by 20% year-over-year, although Newport News Shipbuilding faced some delays, particularly with the CVN 80 due to late equipment delivery. HII also reaffirmed its guidance for 2025, projecting significant growth with a forecast of $15 billion in revenue by 2030, as well as margin and free cash flow normalization. Additionally, the company expects to achieve over $50 billion in awards across 2025 and 2026. The first quarter saw segment operating income of $171 million, with a consolidated operating margin of 5.9%. Free cash flow was negative at $462 million, within the guidance range, and the company maintained its 2025 guidance, anticipating second quarter shipbuilding sales of approximately $2.2 billion.

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.