Huntington Ingalls Industries Inc.’s HII business unit, Ingalls Shipbuilding, unveiled the U.S. Navy’s third Flight III Arleigh Burke-class guided missile destroyer Ted Stevens (DDG 128) warship. This launch should further strengthen Huntington Ingalls’ position in the naval shipbuilding market.
Guided Missile Destroyers and Huntington Ingalls
The U.S. surface fleet is largely dependent on guided missile destroyers, which are capable of fighting multiple air, surface and subsurface threats simultaneously.
Being the U.S. Navy's primary surface combatant, the highly capable and multi-mission Arleigh Burke class destroyers play a significant role in defending America. Huntington Ingalls stays in the spotlight for being one of the two primary manufacturers of this kind of warship.
Coming to the company’s recent achievements in this space, in June 2023, Ingalls Shipbuilding delivered 35 Arleigh Burke-class destroyers to the U.S. Navy, including the guided missile destroyer Jack H. Lucas (DDG 125). The upcoming milestones for Arleigh Burk-class destroyer include the delivery of DDG 128 and launch of Jeremiah Denton (DDG 129) in 2024.
Growth Prospects
Per a Mordor Intelligence Report, the Naval Vessels Market size is estimated at $97.53 billion in 2023 and expected to reach $182.18 billion by 2028, growing at a CAGR of 13.31% during the 2023-2028 period. This should benefit Huntington Ingalls, which designs and builds nuclear-powered ships, such as aircraft carriers and submarines, and non-nuclear ships like surface combatants, expeditionary warfare/amphibious assault and coastal defense surface ships for the U.S. Navy and Coast Guard.
A few other defense players that can gain from the expanding naval vessels market are BAE Systems Plc BAESY, Lockheed Martin LMT and General Dynamics GD.
BAE Systems designs, builds, commissions, repairs and supports a full range of complex naval ships from offshore patrol vessels through to aircraft carriers, giving customers the capability to carry out extensive naval operations. Its Queen Elizabeth Class Aircraft Carriers are the largest warships ever constructed in the United Kingdom.
BAESY boasts a long-term earnings growth rate of 14%. The Zacks Consensus Estimate for BAE Systems’ 2023 sales indicates an improvement of 15.7% from that reported in 2022.
Lockheed Martin manufactures surface ships. Its Littoral Combat Ship (LCS) is a resilient, flexible warship. LCS can serve surface, anti-submarine and mine countermeasure missions. It can also deploy manned and unmanned aerial, surface or sub-surface missions.
LMT boasts a long-term earnings growth rate of 6.5%. The Zacks Consensus Estimate for Lockheed Martin’s 2023 sales indicates an improvement of 0.9% from the year-ago reported figure.
General Dynamics’ unit Bath Iron Works is the leading designer and builder of the Arleigh Burke (DDG 51) class of AEGIS destroyers. In August 2023, the company was awarded a contract from the U.S. Navy to construct three Flight III Arleigh Burke-class destroyers. There are currently six DDG 51 destroyers in production at Bath Iron Works.
GD boasts a long-term earnings growth rate of 8.9%. The Zacks Consensus Estimate for General Dynamics’ 2023 sales indicates an improvement of 7.3% from the year-ago reported figure.
Price Performance
In the past six months, shares of Huntington Ingalls have gained 1.2% against the industry’s 9.2% decline.
Image Source: Zacks Investment Research
Zacks Rank
Huntington Ingalls currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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