Huntington Ingalls Industries
HII
$298.20
-1.06%
Huntington Ingalls Industries (HII) is the largest independent military shipbuilder in the United States, operating through three segments: Ingalls, Newport News Shipbuilding, and Mission Technologies. The company designs, builds, and maintains nuclear-powered aircraft carriers and submarines, as well as non-nuclear surface combatants, and provides uncrewed maritime systems and IT services to government agencies. As a critical supplier to the U.S. Navy with a near-duopoly position in nuclear shipbuilding, HII benefits from long-term defense spending tailwinds, including the proposed $1.5 trillion Pentagon budget and the Navy's goal of a 355-ship fleet. The current investor narrative centers on robust demand for naval vessels, recent earnings beats, and raised guidance, though the stock has experienced significant volatility amid broader market selloffs and concerns about supply chain and labor constraints.…
HII
Huntington Ingalls Industries
$298.20
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Investment Opinion: Should I buy HII Today?
Based on the data, HII is rated a Buy. The consensus recommendation is Buy with a mean score of 2.08, and the average target price of $368.08 implies 23.4% upside. The thesis is that HII's strong revenue growth (13.35% YoY) and forward PE discount (14.31x vs. industry 20x) offer an attractive risk/reward, supported by defense budget tailwinds.
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HII 12-Month Price Forecast
The AI assessment is bullish with medium confidence. HII's strong revenue growth and attractive forward valuation provide a solid foundation, but margin compression and technical weakness introduce uncertainty. The stock is likely to appreciate over the next 12 months as defense budget tailwinds materialize, but investors should watch for margin stabilization. An upgrade to high confidence would occur if gross margins improve above 14% and the stock breaks above $330. A downgrade to neutral would occur if revenue growth falls below 10% or if the stock breaks below $270.
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 $368.08 and implied upside of +23.4% versus the current price.
Average Target
$368.08
0 analysts
Implied Upside
+23.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$304 - $439
Analyst target range
HII is covered by 12 analysts, with a consensus recommendation of 'Buy' (mean score of 2.08 on a 1-5 scale, where 1 is Strong Buy). The average target price is $368.08, implying an upside of 23.4% from the current price of $298.20. The distribution includes 8 Buy ratings, 3 Hold, and 1 Sell, reflecting a bullish sentiment. The high target of $439.00 suggests potential upside of 47.2%, while the low target of $304.00 implies a modest 1.9% upside, indicating a wide range of expectations. Recent ratings actions have been predominantly positive, with TD Cowen and Citigroup reiterating Buy ratings in July 2026, and B of A Securities upgrading from Underperform to Neutral in February 2026, signaling improving sentiment.
Bulls vs Bears: HII Investment Factors
HII presents a classic value-versus-momentum conflict. Bullish evidence is strong: 13.35% revenue growth, a forward PE 28% below the industry, and a Buy consensus with 23.4% upside, all supported by massive defense budget tailwinds. However, the stock's 31.85% six-month decline and margin compression signal operational challenges and negative sentiment. The single most important tension is whether the forward earnings growth (implied 54% EPS increase) materializes; if it does, the stock is deeply undervalued, but if margins continue to erode, the bear case dominates. Currently, the bull case has stronger fundamental backing, but technical weakness warrants caution.
Bullish
- Revenue growth accelerating to 13.35% YoY: Q1 2026 revenue of $3.099B grew 13.35% YoY, up from 5.4% growth in Q1 2025, driven by strong demand across all segments, especially Newport News Shipbuilding. This acceleration indicates robust order flow and execution.
- Forward PE at 14.31x, 28% discount to industry: With a forward PE of 14.31x versus the industry average of 20x, HII trades at a significant discount, implying the market is pricing in below-average growth despite analyst expectations of 54% EPS growth. This suggests potential re-rating upside.
- Analyst consensus Buy with 23.4% upside: 12 analysts rate HII a Buy (mean 2.08), with an average target of $368.08, implying 23.4% upside from $298.20. The high target of $439 suggests 47.2% upside, reflecting strong conviction in the defense shipbuilding cycle.
- Defense budget tailwinds from $1.5T proposal: The proposed $1.5 trillion Pentagon budget and Navy's 355-ship goal directly benefit HII as the largest independent shipbuilder. Recent news highlights HII as a clear winner in shipbuilding, providing multi-year revenue visibility.
Bearish
- Stock down 31.85% in 6 months: HII has fallen from $438 in February to $298.20, a 31.85% decline, underperforming the S&P 500 by 42.9% over the same period. This persistent downtrend signals negative momentum and potential structural concerns.
- Trailing PE at 22.10x, 10.5% premium to industry: Despite the forward discount, the trailing PE of 22.10x is above the industry average of 20x, indicating that on current earnings, the stock is not cheap. The premium suggests the market already expects growth, leaving little room for disappointment.
- Gross margin compressed to 12.7%: Gross margin fell to 12.7% in Q1 2026 from 14.4% a year ago, reflecting cost inflation and fixed-price contract risk. This margin pressure could limit earnings growth despite revenue expansion.
- High PEG ratio of 2.16 signals overvaluation: With a PEG of 2.16, HII's valuation is stretched relative to its growth rate, suggesting the market is paying a premium for expected growth. If growth disappoints, the stock could face de-rating.
HII Technical Analysis
HII's stock has been in a pronounced downtrend over the past six months, with a 6-month price change of -31.85% and a 1-year change of +11.90%. The current price of $298.20 sits near the lower end of its 52-week range, at approximately 18% above the 52-week low of $263.62 and 35% below the 52-week high of $460.00. This positioning suggests the stock is in a bearish phase, trading well off its highs, which could indicate either a value opportunity or a falling knife depending on fundamental catalysts.
Beta
0.24
0.24x market volatility
Max Drawdown
-40.8%
Largest decline past year
52-Week Range
$264-$460
Price range past year
Annual Return
+11.9%
Cumulative gain past year
| Period | HII Return | S&P 500 |
|---|---|---|
| 1m | +7.5% | +3.6% |
| 3m | -7.0% | +2.7% |
| 6m | -31.9% | +11.4% |
| 1y | +11.9% | +18.7% |
| ytd | -14.7% | +12.3% |
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HII Fundamental Analysis
HII's revenue growth has been robust, with Q1 2026 revenue of $3.099 billion, up 13.35% year-over-year from $2.734 billion in Q1 2025. This marks a significant acceleration from the prior year's growth rate of 5.4% (Q1 2025 vs Q1 2024), driven by strong demand across all segments, particularly Newport News Shipbuilding, which contributed $1.665 billion in revenue. The company's net income of $149 million in Q1 2026 was flat year-over-year, but EPS of $3.79 matched the prior year's figure, indicating stable profitability despite higher revenue.
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
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Valuation Analysis: Is HII Overvalued?
Given HII's positive net income, the PE ratio is the primary valuation metric. The trailing PE is 22.10x, while the forward PE is 14.31x, implying the market expects significant earnings growth. The gap between trailing and forward PE suggests a forward earnings growth rate of approximately 54%, which is optimistic but supported by analyst estimates of EPS growth to $27.80 in the next fiscal year. Compared to the industry average PE of 20x (based on sector data), HII trades at a 10.5% premium on a trailing basis, but on a forward basis, it trades at a 28% discount, indicating the market is pricing in above-average growth.
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 risks are moderate but notable. HII carries a debt-to-equity ratio of 0.62, which is manageable but not negligible, and interest expenses of $22M per quarter consume a portion of operating income. The company's gross margin has declined from 14.4% to 12.7% over the past year, indicating cost pressures that could squeeze profitability if not reversed. Free cash flow of $1.06B TTM is positive, but the payout ratio of 35% suggests limited flexibility for dividend growth or share buybacks. Revenue concentration in U.S. Navy contracts exposes HII to budget volatility, though the current $1.5T proposal mitigates this near-term.