Huntington Ingalls Industries, Inc. (HII)

Huntington Ingalls Industries, Inc. (HII) Industrial Operations Profile

Huntington Ingalls Industries, Inc. (HII) stands as a premier defense contractor specializing in the design, construction, and maintenance of military ships, leveraging its extensive experience and capabilities to support U.S. Navy and Coast Guard operations.

What Is the Investment Thesis for HII?

Huntington Ingalls Industries, Inc. (HII) presents a compelling investment thesis driven by its strategic position in the defense sector, particularly as global defense spending continues to rise. With a market capitalization of $11.49B and a P/E ratio of 18.8, HII demonstrates stable profitability, evidenced by a profit margin of 4.7% and a gross margin of 12.4%. The company's focus on nuclear and non-nuclear shipbuilding aligns with increasing U.S. Navy modernization efforts, providing a solid growth catalyst. Moreover, HII's Technical Solutions segment is poised for expansion, targeting a broader range of federal customers, which could enhance revenue diversification. The company’s ongoing contracts and backlog provide visibility into future earnings, while its dividend yield of 1.73% reflects a commitment to returning value to shareholders. However, potential risks include budget constraints in defense spending and competition from other defense contractors, necessitating careful monitoring of market conditions and government policies.

Based on FMP financials and quantitative analysis

HII Key Highlights

• Market Cap of $11.49B, reflecting strong industry positioning.
• P/E ratio of 18.8, indicating market confidence in future earnings.
• Profit margin of 4.7%, showcasing operational efficiency.
• Gross margin of 12.4%, above industry averages, indicating robust pricing power.
• Dividend yield of 1.73%, demonstrating commitment to shareholder returns.

Who Are HII's Competitors?

HII is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are HII's Key Strengths?

• Strong market position in military shipbuilding.
• Diverse portfolio of products and services.
• Established relationships with key government agencies.
• Robust backlog of contracts ensuring future revenue.

What Are HII's Weaknesses?

• Dependence on U.S. government contracts for revenue.
• Vulnerability to budget cuts in defense spending.
• High operational costs associated with shipbuilding.
• Limited international presence compared to some competitors.

What Could Drive HII Stock Higher?

• U.S. Navy's projected budget increase for modernization efforts, expected to drive demand for new vessels.
• Expansion of the Technical Solutions segment, targeting federal contracts for IT and mission solutions.
• Continued investment in unmanned systems, aligning with defense trends towards automation and advanced technologies.
• Potential international contracts as global defense spending rises.
• Lifecycle sustainment services providing stable revenue from existing naval vessels.

What Are the Key Risks for HII?

• Budget constraints in U.S. defense spending could impact future contracts.
• Intense competition from other defense contractors may pressure margins.
• Regulatory changes affecting government contracting processes.
• Economic downturns could lead to reduced defense spending.

What Are the Growth Opportunities for HII?

• Growth opportunity 1: The U.S. Navy's ongoing modernization efforts are expected to drive demand for new vessels, particularly nuclear-powered ships. The Navy's budget is projected to increase by 3-5% annually over the next five years, creating a favorable environment for HII to secure additional contracts and expand its production capabilities.
• Growth opportunity 2: HII's Technical Solutions segment is poised for growth as the Department of Defense increasingly seeks integrated technology solutions. With a market size of approximately $100 billion, this segment can leverage HII's existing relationships and expertise to capture a larger share of federal contracts over the next three to five years.
• Growth opportunity 3: The global shift towards unmanned systems presents a significant opportunity for HII. As defense budgets allocate more resources to unmanned technologies, HII can enhance its offerings in this area, potentially increasing revenue streams by 10-15% within the next five years.
• Growth opportunity 4: The expansion of HII's lifecycle sustainment services can cater to the growing need for maintenance and support of aging naval fleets. This market is expected to grow at a CAGR of 4% through 2028, providing HII with a stable revenue source as it enhances its service capabilities.
• Growth opportunity 5: International defense contracts are becoming increasingly important as countries modernize their naval capabilities. HII can explore partnerships and joint ventures to tap into foreign markets, potentially increasing its international revenue contribution by 20% over the next five years.

What Opportunities Does HII Have?

• Increasing defense budgets globally providing growth potential.
• Expansion into unmanned systems and advanced technologies.
• Potential for international contracts as global naval modernization increases.
• Growth in lifecycle sustainment services for aging fleets.

What Threats Does HII Face?

• Intense competition from other defense contractors.
• Geopolitical tensions affecting defense spending priorities.
• Regulatory changes impacting government contracts.
• Economic downturns leading to budget constraints.

What Are HII's Competitive Advantages?

• Long-term contracts with the U.S. government provide revenue stability.
• Specialized expertise in nuclear and non-nuclear shipbuilding creates competitive differentiation.
• Established reputation and relationships within the defense sector enhance contract opportunities.
• Significant investment in R&D supports innovation and technological advancement.

What Does HII Do?

Founded in 1886, Huntington Ingalls Industries, Inc. (HII) has evolved into one of the largest military shipbuilding companies in the United States, headquartered in Newport News, Virginia. The company operates through three primary segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Technical Solutions. HII is renowned for its expertise in constructing both nuclear-powered and non-nuclear military vessels. This includes a diverse range of ships such as amphibious assault ships, expeditionary warfare ships, surface combatants, and national security cutters, primarily serving the U.S. Navy and U.S. Coast Guard. The company also provides comprehensive lifecycle support services, including maintenance, refueling, and inactivation of nuclear-powered ships like aircraft carriers and submarines. Additionally, HII offers advanced information technology and mission-based solutions for the Department of Defense, as well as environmental management services. Over the years, HII has positioned itself as a critical player in the defense sector, benefiting from long-term contracts and a strong backlog of orders, which underscores its importance in national security and maritime operations. The company employs approximately 44,000 individuals, showcasing its significant role in the U.S. economy and defense infrastructure.

What Products and Services Does HII Offer?

• Design and build military ships for the U.S. Navy and Coast Guard.
• Provide lifecycle sustainment services for naval vessels.
• Offer nuclear-powered ship construction and maintenance.
• Deliver high-end information technology solutions for defense customers.
• Engage in environmental management services for government and private sectors.
• Develop unmanned systems for military applications.

How Does HII Make Money?

• Revenue primarily generated through government contracts for shipbuilding and maintenance.
• Lifecycle sustainment services provide ongoing revenue streams from existing naval vessels.
• Technical Solutions segment offers IT and mission-based solutions to federal agencies.
• Nuclear management services contribute to specialized revenue from nuclear-powered vessels.
• Environmental management services cater to both public and private sector clients.

What Industry Does HII Operate In?

The Aerospace & Defense industry is experiencing significant growth, driven by increased global defense spending and geopolitical tensions. The U.S. defense budget is projected to continue rising, with a focus on modernization and technological advancements in military capabilities. Huntington Ingalls Industries, Inc. (HII) is well-positioned within this landscape, benefiting from long-term contracts with the U.S. government and a strong backlog of orders. The competitive landscape includes major players such as Lockheed Martin and General Dynamics, but HII's specialization in shipbuilding and lifecycle support services differentiates it in a crowded market, allowing for sustained growth opportunities.

Who Are HII's Key Customers?

• U.S. Navy and U.S. Coast Guard as primary customers.
• Department of Defense for technology and support services.
• Federal civilian agencies requiring IT and mission solutions.
• State and local governments for environmental management services.
• Private sector companies needing nuclear and operational support.

Company Profile

Huntington Ingalls Industries, Inc. operates in the Aerospace & Defense industry within the Industrials sector. It is headquartered in Newport News, US. The company is led by CEO Christopher Douglas Kastner. HII has traded publicly since 2011.

ROE 12%Key Financial Metrics

Return on equity for Huntington Ingalls Industries, Inc. stands at 12.0%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 4.8%, showing how much profit it generates from its asset base. HII trades at a trailing price-to-earnings ratio of 18.78, below the Industrials sector average of ~30x. Its free cash flow yield is 9.6%, a gauge of the cash the business throws off relative to its market value. A current ratio of 1.19 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 5.5%, the inverse of the P/E and a quick read on earnings relative to price.

HII Valuation & Market Position

With a $11.49B market cap, Huntington Ingalls Industries, Inc. sits in the large-cap segment of the market. Relative to its peer group, HII's quantitative score of 64/100 is roughly in line with the peer average of 65/100.

Quarterly Financial Performance: Huntington Ingalls Industries, Inc.

Revenue for Huntington Ingalls Industries, Inc. came in at $3.10B during Q1 2026, a 10.8% contraction versus the preceding quarter. The company recorded net income of $149.0M, with diluted EPS of $3.79. Quarter-over-quarter revenue has been mixed, typical for a large-cap company operating in Industrials. Across the four most recent quarters, HII averaged $3.84 in diluted EPS.

F-Score 6/9Financial Health

Huntington Ingalls Industries, Inc.'s Piotroski F-Score is 6/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 2.86 places it in the grey zone, a middle ground that warrants monitoring.

6/8 beatsEarnings Track Record

Huntington Ingalls Industries, Inc. has beaten Wall Street's EPS estimate in 6 of its last 8 reported quarters — a consistent record of delivering on expectations. Reported results have landed about 7.0% above estimates on average.

FY2026 estForward Outlook

Wall Street analysts project Huntington Ingalls Industries, Inc. revenue of about $13.00B for fiscal 2026, with EPS near $17.32. The estimate reflects 11 contributing analysts.

Net buyingInsider Activity

Over the past six months, Huntington Ingalls Industries, Inc. insiders filed 15 SEC Form 4 transactions — 0 sales and 15 purchases. On net that is roughly 502 shares acquired (about $41K) — insiders putting money in tends to read as conviction.

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Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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