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Huntington Ingalls Industries (HII)
NYSE:HII

Huntington Ingalls (HII) AI Stock Analysis

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Huntington Ingalls

(NYSE:HII)

71Outperform
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
Free Cash Flow Expectations
HII is expected to generate a sizable free cash flow inflow upon signing 17 submarine contracts.
Mission Technology's Performance
HII’s Mission Technology’s business outperformed expectations, with a funded BtB of 2.2x and ~$11bn of potential total awarded contract value.
Negative Factors
Contractual Uncertainty
There is increased uncertainty in timing and structure of a large 17-ship agreement with the Navy customer for Virginia-class Block V, VI and Columbia-class submarines.
Execution Challenges
Shipbuilding execution challenges persist, there is no quick fix, and consensus EPS will drop significantly.
Financial Performance
Huntington Ingalls Industries disappointed investors with an adj. EPS miss and a downward revision of its 2024 outlook.

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

Huntington Ingalls Business Overview & Revenue Model

Company DescriptionHuntington Ingalls Industries, Inc. engages in designing, building, overhauling, and repairing military ships in the United States. It operates through three segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Technical Solutions. The company is involved in the design and construction of non-nuclear ships comprising amphibious assault ships; expeditionary warfare ships; surface combatants; and national security cutters for the U.S. Navy and U.S. Coast Guard. It also provides nuclear-powered ships, such as aircraft carriers and submarines, as well as refueling and overhaul, and inactivation services of ships. In addition, the company offers naval nuclear support services, including fleet services comprising design, construction, maintenance, and disposal activities for in-service the U.S. Navy nuclear ships; and maintenance services on nuclear reactor prototypes. Further, it provides life-cycle sustainment services to the U.S. Navy fleet and other maritime customers; high-end information technology and mission-based solutions for Department of Defense (DoD), intelligence, and federal civilian customers; nuclear management and operations and environmental management services for the Department of Energy, DoD, state and local governments, and private sector companies; defense and federal solutions; and unmanned systems. Huntington Ingalls Industries, Inc. was founded in 1886 and is headquartered in Newport News, Virginia.
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
85
Very Positive
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.
Balance Sheet
70
Positive
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.
Cash Flow
78
Positive
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.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
11.54B11.45B10.68B9.52B9.36B
Gross Profit
1.45B1.65B1.44B1.37B1.67B
EBIT
535.00M781.00M773.00M513.00M799.00M
EBITDA
535.00M1.29B1.18B1.00B1.15B
Net Income Common Stockholders
550.00M681.00M579.00M544.00M696.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
831.00M430.00M467.00M627.00M512.00M
Total Assets
12.14B11.21B10.86B10.63B8.16B
Total Debt
3.41B2.67B3.15B3.49B1.84B
Net Debt
2.58B2.24B2.68B2.87B1.33B
Total Liabilities
7.47B7.12B7.37B7.82B6.26B
Stockholders Equity
4.67B4.09B3.49B2.81B1.90B
Cash FlowFree Cash Flow
26.00M678.00M482.00M429.00M740.00M
Operating Cash Flow
393.00M970.00M766.00M760.00M1.09B
Investing Cash Flow
-348.00M-236.00M-268.00M-1.95B-759.00M
Financing Cash Flow
356.00M-771.00M-658.00M1.31B103.00M

Huntington Ingalls Technical Analysis

Technical Analysis Sentiment
Positive
Last Price227.48
Price Trends
50DMA
200.70
Positive
100DMA
194.16
Positive
200DMA
219.34
Positive
Market Momentum
MACD
8.27
Negative
RSI
66.43
Neutral
STOCH
80.40
Negative
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 227.48 is above the 20-day moving average (MA) of 213.11, above the 50-day MA of 200.70, and above the 200-day MA of 219.34, indicating a bullish trend. The MACD of 8.27 indicates Negative momentum. The RSI at 66.43 is Neutral, neither overbought nor oversold. The STOCH value of 80.40 is Negative, 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GDGD
80
Outperform
$72.87B18.8418.23%2.09%14.11%17.65%
LMLMT
79
Outperform
$111.93B20.6482.55%2.70%3.12%-15.29%
NONOC
73
Outperform
$70.02B19.1525.41%1.69%0.61%77.28%
LHLHX
72
Outperform
$41.13B26.078.49%2.13%5.39%36.86%
HIHII
71
Outperform
$8.93B16.3012.56%2.30%0.71%-18.39%
63
Neutral
$4.21B11.555.28%250.72%4.13%-9.42%
BABA
52
Neutral
$137.90B-162.23%-9.15%-406.76%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HII
Huntington Ingalls
227.48
-11.81
-4.94%
BA
Boeing
182.89
4.04
2.26%
GD
General Dynamics
271.51
-9.98
-3.55%
LHX
L3Harris Technologies
219.91
12.82
6.19%
LMT
Lockheed Martin
477.72
26.36
5.84%
NOC
Northrop Grumman
486.67
19.70
4.22%

Huntington Ingalls Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: -1.24%|
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.