Huntington Ingalls Industries
HII
$281.67
+0.29%
Huntington Ingalls Industries (HII) is the largest independent military shipbuilder in the United States, operating through three segments: Ingalls Shipbuilding (non-nuclear ships like amphibious vessels and destroyers), Newport News Shipbuilding (nuclear-powered aircraft carriers and submarines), and Mission Technologies (uncrewed systems and IT services). As a critical supplier to the U.S. Navy, HII holds a near-duopoly position in nuclear shipbuilding alongside General Dynamics, with exclusive capabilities in Ford-class carriers. The current investor narrative centers on a robust defense spending environment, highlighted by a proposed $1.5 trillion Pentagon budget and a 355-ship Navy goal, which could drive sustained demand for HII's shipbuilding programs. However, the stock has faced significant volatility due to broader market selloffs and concerns about execution and cash flow, despite recent earnings beats and raised guidance.…
HII
Huntington Ingalls Industries
$281.67
Related headlines
Investment Opinion: Should I buy HII Today?
Rating: Buy. HII is a strategic defense asset with a monopoly in nuclear shipbuilding, and the current valuation offers an attractive entry point. With a consensus Buy rating and an average analyst target of $368.42, the stock has a potential upside of 28.8% from the current price of $285.93. The thesis is supported by accelerating revenue growth of 13.35% YoY, a forward PE of 13.72x, and a PEG ratio of 2.16, which, while not cheap, is reasonable given the growth prospects. The company's strong backlog and raised guidance provide confidence in future earnings.
Sign up to view all
HII 12-Month Price Forecast
The AI assessment is bullish on HII, driven by strong revenue growth, a favorable defense budget environment, and a reasonable forward valuation. However, confidence is medium due to thin margins and execution risks. The stock's significant underperformance over the past six months suggests negative sentiment, but the fundamentals are improving. If HII continues to beat earnings and raise guidance, the stock could re-rate higher. Conversely, any margin deterioration or program delays would warrant a downgrade to neutral.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Huntington Ingalls Industries's 12-month outlook, with a consensus price target around $368.42 and implied upside of +30.8% versus the current price.
Average Target
$368.42
0 analysts
Implied Upside
+30.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$304 - $439
Analyst target range
The target price range spans from a low of $304.00 to a high of $439.00, with the average at $368.42. The high target of $439.00 suggests a potential upside of 53.5%, implying expectations of strong execution on the Navy's shipbuilding programs and significant margin expansion. The low target of $304.00 still represents a 6.3% upside from current levels, indicating that even the most bearish analyst sees limited downside. The spread between high and low targets is 44.4% of the average, reflecting moderate uncertainty, but the consistent Buy ratings and recent upgrades suggest analysts have growing conviction in HII's growth story, driven by the favorable defense budget environment and the company's strategic importance.
Bulls vs Bears: HII Investment Factors
HII presents a compelling bull case driven by record revenue growth, a strategic monopoly in nuclear shipbuilding, and a favorable defense budget environment. However, the bear case is equally strong, with severe price underperformance, thin margins, and execution risks. Currently, the bull case has stronger evidence given the accelerating revenue growth and raised guidance, but the stock's significant drawdown and valuation concerns warrant caution. The most critical tension is whether HII can convert its robust backlog and revenue growth into sustainable margin expansion and earnings growth, which would justify its forward valuation and reverse the negative price trend.
Bullish
- Record Revenue Growth: Q1 2026 revenue surged 13.35% YoY to $3.099B, accelerating from 12.6% in Q4 2025 and 16.3% in Q3 2025, driven by robust demand across all segments. This growth is supported by a record backlog and increased naval procurement, positioning HII for sustained expansion.
- Strategic Monopoly in Nuclear Shipbuilding: HII is the sole producer of Ford-class aircraft carriers and a key subcontractor for Virginia- and Columbia-class submarines, creating a near-duopoly with General Dynamics. This exclusive capability provides a durable competitive moat and long-term revenue visibility.
- Favorable Defense Budget Environment: The proposed $1.5 trillion Pentagon budget and the 355-ship Navy goal directly benefit HII's shipbuilding programs. Recent news highlights that HII is a clear winner in the defense spending surge, with analysts expecting sustained demand for naval vessels.
- Strong Earnings Beat and Raised Guidance: HII reported a strong earnings beat in Q2 2026 and raised its full-year guidance, signaling confidence in future performance. This positive development has led to recent upgrades and a consensus Buy rating from analysts.
Bearish
- Severe Price Decline and Underperformance: HII's stock has fallen 33.37% over the past six months and is down 18.25% YTD, significantly underperforming the S&P 500, which gained 12.94% YTD. The maximum drawdown of -40.77% reflects a deep loss of investor confidence.
- Low Profitability Margins: Despite revenue growth, HII's net margin is only 4.85% and operating margin is 4.87%, which are thin for a defense contractor. Gross margin is just 12.70%, indicating high cost pressures and limited pricing power.
- High Valuation on Trailing Earnings: The trailing PE of 22.10x is elevated relative to the forward PE, and the PEG ratio of 2.16 suggests the stock is priced at a premium to its expected growth rate. This could lead to multiple compression if earnings growth disappoints.
- Execution and Cash Flow Concerns: Despite recent earnings beats, HII has faced historical execution issues and cash flow volatility. The free cash flow TTM of $1.06B is modest relative to revenue, and the debt-to-equity ratio of 0.62 indicates a moderate debt burden that could strain finances.
HII Technical Analysis
HII's price trend over the past year has been characterized by a sharp decline followed by a partial recovery, with the stock currently trading at $285.93, down 33.37% over the past six months but up 5.91% over the past year. The stock is positioned at 9.3% above its 52-week low of $263.62 and 37.8% below its 52-week high of $460.00, indicating it is near the lower end of its range, which often suggests either a value opportunity or persistent negative sentiment. The 1-year price change of +5.91% masks a severe drawdown from the highs, with a maximum drawdown of -40.77%, reflecting a significant loss of investor confidence despite the longer-term positive return.
Beta
0.23
0.23x market volatility
Max Drawdown
-40.8%
Largest decline past year
52-Week Range
$264-$460
Price range past year
Annual Return
+3.6%
Cumulative gain past year
| Period | HII Return | S&P 500 |
|---|---|---|
| 1m | -14.1% | -1.6% |
| 3m | -5.4% | +2.2% |
| 6m | -32.2% | +14.4% |
| 1y | +3.6% | +16.2% |
| ytd | -19.5% | +11.1% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
HII Fundamental Analysis
HII's revenue trajectory shows robust growth, with Q1 2026 revenue of $3.099 billion, up 13.35% year-over-year from $2.734 billion in Q1 2025. This growth is driven by strong demand across all segments, particularly Newport News Shipbuilding, which contributed $1.665 billion in revenue, and Ingalls at $725 million, while Mission Technologies added $748 million. The multi-quarter trend shows accelerating growth, with Q1 2026's 13.35% YoY increase surpassing the 12.6% growth seen in Q4 2025 and the 16.3% in Q3 2025, indicating a solid upward trajectory. The company's revenue growth is supported by a record backlog and increased naval procurement, positioning HII for continued expansion.
Quarterly Revenue
$3.1B
2026-03
Revenue YoY Growth
+13.4%
YoY Comparison
Gross Margin
13.2%
Latest Quarter
Free Cash Flow
$1.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is HII Overvalued?
Given HII's positive net income of $149 million in Q1 2026, the price-to-earnings (PE) ratio is the primary valuation metric. The trailing PE stands at 22.10x, while the forward PE is 13.72x, implying the market expects significant earnings growth, with the forward multiple being 37.9% lower than the trailing. This gap suggests that analysts anticipate a substantial increase in EPS, likely driven by higher revenue and margin expansion. The PEG ratio of 2.16 indicates that the stock is priced at a premium to its expected earnings growth rate, which may warrant caution.
PE
22.1x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 9x~25x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: HII's financial health is strained by thin margins, with a net margin of only 4.85% and operating margin of 4.87% in Q1 2026. The company carries a debt-to-equity ratio of 0.62, indicating moderate leverage, and interest expenses of $22 million per quarter, which could pressure earnings if rates rise. Free cash flow TTM of $1.06B is modest relative to revenue of $12.4B, suggesting limited cash generation to fund dividends and debt repayment. Revenue concentration in U.S. Navy programs exposes HII to budget cuts or program cancellations, and any execution missteps on complex shipbuilding projects could lead to cost overruns and margin erosion.