Huntington Ingalls Reports Strong Quarterly Results but Stock Drops on Cash Flow Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Should l Buy HII?
Source: seekingalpha
- Net Income Growth: Huntington Ingalls reported net income of $159 million, or $4.04 per share, exceeding the consensus estimate of $3.89, and marking a significant increase from $123 million, or $3.15 per share, a year earlier, indicating improved profitability.
- Revenue Increase: The company's quarterly revenue rose to $3.48 billion from $3.00 billion, surpassing Wall Street's expectation of $3.1 billion, primarily driven by strong demand in shipbuilding and Mission Technologies, reflecting robust market interest in its offerings.
- Cash Flow Outlook Downgrade: Despite the earnings beat, Huntington Ingalls forecasts free cash flow of $500 million to $600 million for fiscal 2026, significantly lower than the $800 million generated in 2025, suggesting potential cash flow pressures that may impact investor confidence.
- Delivery Milestones Achieved: During the quarter, the company successfully delivered the Virginia-class submarine Massachusetts and the guided missile destroyer Ted Stevens, marking key progress in ship delivery, although overall operating margins remain under pressure.
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Analyst Views on HII
Wall Street analysts forecast HII stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for HII is 344.80 USD with a low forecast of 300.00 USD and a high forecast of 376.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
6 Analyst Rating
4 Buy
1 Hold
1 Sell
Moderate Buy
Current: 369.380
Low
300.00
Averages
344.80
High
376.00
Current: 369.380
Low
300.00
Averages
344.80
High
376.00
About HII
Huntington Ingalls Industries, Inc. is a global, all-domain defense provider. The Company delivers ships and all-domain solutions in service of the nation. It delivers critical capabilities extending from ships to unmanned systems, cyber, ISR, AI/ML and synthetic training. It operates through three segments: Ingalls Shipbuilding (Ingalls), Newport News Shipbuilding (Newport News), and Mission Technologies. Through its Ingalls segment, the Company designs and constructs non-nuclear ships for the United States Navy and Coast Guard, including amphibious assault ships, expeditionary warfare ships, surface combatants, and national security cutters (NSC). The core business of its Newport News segment is designing and constructing nuclear-powered aircraft carriers and submarines, and the refueling and overhaul and the inactivation of nuclear-powered aircraft carriers. The Company’s Mission Technologies segment develops integrated solutions that enable connected, all-domain force.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Surge in Defense Spending: Global defense spending is projected to reach $2.6 trillion in 2026, reflecting an 8.1% increase from 2025, driven by heightened geopolitical uncertainties prompting nations to boost military budgets, thereby fostering overall growth in the defense sector.
- Strong Performance by Major Firms: Lockheed Martin, Northrop Grumman, and Huntington Ingalls Industries have all seen their stock prices rise over 20% in early 2026, with Lockheed Martin leading at a 26% increase, indicating strong market confidence and investment enthusiasm in the defense industry.
- Increased NATO Spending Goals: Under pressure from the Trump administration, NATO's defense spending target has been raised from 2% to 5% of GDP by 2035, prompting major economies like Germany to significantly ramp up defense investments, with Germany expected to meet this target by 2030, further driving growth in the global defense market.
- Surge in U.S. Arms Sales: The Trump administration recently approved massive arms sales to Israel and Saudi Arabia, totaling $6.67 billion and $9 billion respectively, primarily benefiting U.S. defense firms, highlighting that in an increasingly dangerous global security environment, the defense industry will continue to thrive from government spending and investments.
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- Market Implications: This adjustment reflects JPMorgan's updated outlook on the asset's performance and potential growth.
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Huntington Ingalls Industries Q4 2025 Earnings Call Highlights
- Significant Revenue Growth: Huntington Ingalls reported total revenues of $12.5 billion for 2025, reflecting an 8.2% year-over-year increase, with earnings per share at $15.39, indicating strong performance in shipbuilding that is expected to enhance shareholder returns.
- Order and Contract Expansion: The company secured $16.9 billion in new awards for 2025, with all three divisions achieving record revenues, demonstrating sustained competitiveness in the defense market and potential for increased market share in the future.
- Production Efficiency Improvement: HII achieved a 14% year-over-year increase in throughput, with a target of an additional 15% increase in 2026, driven by hiring 6,600 shipbuilders and meeting a $250 million cost reduction target, further optimizing operational efficiency to meet market demand.
- Mid-term Growth Outlook: The company raised its medium-term shipbuilding revenue growth guidance from 4% to 6%, with 2026 revenue expectations between $9.7 billion and $9.9 billion, reflecting confidence in future market demand while emphasizing the need for effective contract acquisition and production scheduling risk management.
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Huntington Ingalls Reports Strong Quarterly Results but Stock Drops on Cash Flow Concerns
- Net Income Growth: Huntington Ingalls reported net income of $159 million, or $4.04 per share, exceeding the consensus estimate of $3.89, and marking a significant increase from $123 million, or $3.15 per share, a year earlier, indicating improved profitability.
- Revenue Increase: The company's quarterly revenue rose to $3.48 billion from $3.00 billion, surpassing Wall Street's expectation of $3.1 billion, primarily driven by strong demand in shipbuilding and Mission Technologies, reflecting robust market interest in its offerings.
- Cash Flow Outlook Downgrade: Despite the earnings beat, Huntington Ingalls forecasts free cash flow of $500 million to $600 million for fiscal 2026, significantly lower than the $800 million generated in 2025, suggesting potential cash flow pressures that may impact investor confidence.
- Delivery Milestones Achieved: During the quarter, the company successfully delivered the Virginia-class submarine Massachusetts and the guided missile destroyer Ted Stevens, marking key progress in ship delivery, although overall operating margins remain under pressure.
See More
Huntington Ingalls Reports Strong Q4 2025 Earnings with Significant Growth
- Earnings Beat: Huntington Ingalls Industries (HII) reported a Q4 2025 GAAP EPS of $4.04, exceeding expectations by $0.15, indicating a strong improvement in profitability that is likely to positively impact stock performance.
- Significant Revenue Growth: The company achieved $3.5 billion in revenue for Q4, marking a 16.7% year-over-year increase and surpassing market expectations by $400 million, reflecting robust demand in the defense and shipbuilding sectors and further solidifying its market position.
- Cash Flow Improvement: Net cash provided by operating activities reached $1.196 billion in 2025, with free cash flow at $800 million, a substantial increase from $393 million and $40 million in 2024, enhancing the company's financial flexibility and investment capacity.
- Optimistic Outlook: HII projects FY26 shipbuilding revenue between $9.7 billion and $9.9 billion, with expected operating margins between 5.5% and 6.5%, demonstrating confidence in future growth, particularly through continued investments in shipbuilding and Mission Technologies.
See More
Defense Stocks Surge in 2026 Amid Geopolitical Tensions
- Surge in Defense Spending: Global defense spending is projected to reach $2.6 trillion in 2026, reflecting an 8.1% increase from 2025, driven by heightened geopolitical uncertainties prompting nations to boost military budgets, thereby fostering overall growth in the defense sector.
- Strong Performance by Major Firms: Lockheed Martin, Northrop Grumman, and Huntington Ingalls Industries have all seen their stock prices rise over 20% in early 2026, with Lockheed Martin leading at a 26% increase, indicating strong market confidence and investment enthusiasm in the defense industry.
- Increased NATO Spending Goals: Under pressure from the Trump administration, NATO's defense spending target has been raised from 2% to 5% of GDP by 2035, prompting major economies like Germany to significantly ramp up defense investments, with Germany expected to meet this target by 2030, further driving growth in the global defense market.
- Surge in U.S. Arms Sales: The Trump administration recently approved massive arms sales to Israel and Saudi Arabia, totaling $6.67 billion and $9 billion respectively, primarily benefiting U.S. defense firms, highlighting that in an increasingly dangerous global security environment, the defense industry will continue to thrive from government spending and investments.
See More
HII: JP Morgan Increases Target Price to $388, Up from $342
- Price Increase Announcement: JPMorgan has raised its price target for a specific asset from $342 to $388.
- Market Implications: This adjustment reflects JPMorgan's updated outlook on the asset's performance and potential growth.
See More
Huntington Ingalls Industries Q4 2025 Earnings Call Highlights
- Significant Revenue Growth: Huntington Ingalls reported total revenues of $12.5 billion for 2025, reflecting an 8.2% year-over-year increase, with earnings per share at $15.39, indicating strong performance in shipbuilding that is expected to enhance shareholder returns.
- Order and Contract Expansion: The company secured $16.9 billion in new awards for 2025, with all three divisions achieving record revenues, demonstrating sustained competitiveness in the defense market and potential for increased market share in the future.
- Production Efficiency Improvement: HII achieved a 14% year-over-year increase in throughput, with a target of an additional 15% increase in 2026, driven by hiring 6,600 shipbuilders and meeting a $250 million cost reduction target, further optimizing operational efficiency to meet market demand.
- Mid-term Growth Outlook: The company raised its medium-term shipbuilding revenue growth guidance from 4% to 6%, with 2026 revenue expectations between $9.7 billion and $9.9 billion, reflecting confidence in future market demand while emphasizing the need for effective contract acquisition and production scheduling risk management.
See More
Significant Stock Movements in Midday Trading
- McKesson Earnings Beat: McKesson's fiscal third-quarter earnings per share exceeded Wall Street's highest estimates, and the adjusted full-year EPS guidance was raised above analyst consensus, leading to a 16% stock price increase, indicating strong performance in the medical supply sector.
- Bob's Discount Furniture IPO: Bob's Discount Furniture debuted on the New York Stock Exchange with shares priced at $17, recently rising 10%, marking a successful entry into the public market and laying the groundwork for future growth.
- Fluence Energy Earnings Miss: Fluence Energy reported first-quarter revenue of $475.2 million, falling short of the $481.2 million consensus, with a per-share loss of 34 cents missing the 21-cent loss estimate, resulting in a 31% stock price drop, reflecting market concerns over its profitability.
- Cardinal Health Guidance Raised: Cardinal Health reported quarterly adjusted earnings of $2.63 per share, exceeding the $2.36 consensus, with revenue of $65.63 billion surpassing the $64.14 billion estimate, leading to an 8% stock price increase, showcasing strong growth potential in the healthcare services sector.
See More
Huntington Ingalls Reports Strong Quarterly Results but Stock Drops on Cash Flow Concerns
- Net Income Growth: Huntington Ingalls reported net income of $159 million, or $4.04 per share, exceeding the consensus estimate of $3.89, and marking a significant increase from $123 million, or $3.15 per share, a year earlier, indicating improved profitability.
- Revenue Increase: The company's quarterly revenue rose to $3.48 billion from $3.00 billion, surpassing Wall Street's expectation of $3.1 billion, primarily driven by strong demand in shipbuilding and Mission Technologies, reflecting robust market interest in its offerings.
- Cash Flow Outlook Downgrade: Despite the earnings beat, Huntington Ingalls forecasts free cash flow of $500 million to $600 million for fiscal 2026, significantly lower than the $800 million generated in 2025, suggesting potential cash flow pressures that may impact investor confidence.
- Delivery Milestones Achieved: During the quarter, the company successfully delivered the Virginia-class submarine Massachusetts and the guided missile destroyer Ted Stevens, marking key progress in ship delivery, although overall operating margins remain under pressure.
See More
Huntington Ingalls Reports Strong Q4 2025 Earnings with Significant Growth
- Earnings Beat: Huntington Ingalls Industries (HII) reported a Q4 2025 GAAP EPS of $4.04, exceeding expectations by $0.15, indicating a strong improvement in profitability that is likely to positively impact stock performance.
- Significant Revenue Growth: The company achieved $3.5 billion in revenue for Q4, marking a 16.7% year-over-year increase and surpassing market expectations by $400 million, reflecting robust demand in the defense and shipbuilding sectors and further solidifying its market position.
- Cash Flow Improvement: Net cash provided by operating activities reached $1.196 billion in 2025, with free cash flow at $800 million, a substantial increase from $393 million and $40 million in 2024, enhancing the company's financial flexibility and investment capacity.
- Optimistic Outlook: HII projects FY26 shipbuilding revenue between $9.7 billion and $9.9 billion, with expected operating margins between 5.5% and 6.5%, demonstrating confidence in future growth, particularly through continued investments in shipbuilding and Mission Technologies.
See More
