Valued at a market cap of $7.7 billion, Huntington Ingalls Industries, Inc. (HII) designs, builds, overhauls, and repairs military ships in the United States. The Newport News, Virginia-based 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 is expected to release its fiscal Q4 earnings results on Thursday, Feb. 6.
Ahead of this event, analysts expect the shipbuilding company to report a profit of $3.24 per share, down by a massive 53% from $6.90 per share in the year-ago quarter. The company has beaten Wall Street's bottom-line estimates in three of the last four quarters while missing on another occasion. Its adjusted EPS of $2.56 per share in the previous quarter fell short of the consensus estimates by a concerning margin of 33.3%.
For fiscal 2024, analysts expect HII to report an EPS of $14.05, down 17.7% from $17.07 in fiscal 2023. Nonetheless, in fiscal 2025, EPS is expected to grow 7.2% year-over-year to $15.06.
Shares of HII have declined 22.5% over the past 52 weeks, significantly underperforming both the S&P 500 Index's ($SPX) 22.1% rise and the Industrial Select Sector SPDR Fund’s (XLI) 19.9% return over the same time frame.
On Oct. 31, shares of HII crashed 26.2% after its Q3 earnings release as the company delivered weaker-than-expected Q3 revenues of $2.8 billion and profit of $2.56 per share. Moreover, a 2.4% year-over-year drop in revenues and a 30.8% decline in EPS might have further disappointed the investors. Lower sales volume and a significant decline in operating income from its Ingalls and Newport News business segments adversely impacted its performance.
Wall Street analysts are cautious about Huntington Ingalls’s stock, with a "Hold" rating overall. Among 10 analysts covering the stock, one recommends a "Strong Buy," seven suggest “Hold,” one indicates a “Moderate Sell,” and one suggests a “Strong Sell.” This configuration is slightly less bullish than three months ago, with two analysts suggesting a “Strong Buy.”
The average price target for HII is $224.36, which indicates a modest 13.6% potential upside from the current levels.
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