Huntington Ingalls Faces Turbulent Waters: Stock Falls Amid Earnings Woes
Huntington Ingalls Industries, Inc. (HII) specializes in designing, building, overhauling, and repairing military ships, holding a market cap of $10.1 billion. Based in Newport News, Virginia, the company also delivers a variety of professional services that include defense and federal solutions, nuclear and environmental services, as well as unmanned systems, catering to government and industry partners.
Large-Cap Leader with Recent Struggles
Fitting into the large-cap category, Huntington Ingalls stands out as America’s largest military shipbuilder, recognized for its advanced engineering and defense technologies. Notably, it is the only builder of amphibious ships and has successfully delivered 15 large-deck ships to the U.S. Navy.
Stock Declines and Recent Performance
Nonetheless, HII is experiencing a significant downturn. Shares have dropped 36.4% from their 52-week high of $299.50, recorded on March 5. Over the past three months, the stock has decreased 27.6%, significantly underperforming the S&P 500 Index’s gains of 4.1% within the same period.
In the last six months, HII has again lagged, with a 23.2% decline compared to SPX’s fortunate 8.9% gain. Additionally, over a full year, HII shares fell 26.3%, which falls short of SPX’s impressive rally of 24.9%. The trend reveals that HII has been trading below both its 200-day and 50-day moving averages since the end of September, indicating a bearish outlook.
Analysts Weigh In
On December 18, shares of Huntington Ingalls saw a minor uptick following a note from TD Cowen suggesting that a “complicated” continuing resolution and emergency funding agreement reached by U.S. lawmakers could benefit the company. However, a sharp decline of over 26% followed the release of its disappointing Q3 earnings report on October 31. HII reported a 30.8% year-over-year fall in EPS to $2.56, missing the consensus estimate of $3.84. Additionally, revenue decreased by 2.4% year-over-year to $2.75 billion, also missing Wall Street’s expectation of $2.88 billion.
Performance Compared to Competitors
Compared to its rival, General Dynamics Corporation (GD), which gained 3.4% over the past year, HII’s performance has raised concerns among analysts. The stock currently holds a consensus rating of “Hold” based on assessments from 10 analysts, with a mean price target of $222.40, reflecting a suggested premium of 16.8% from its current price.
On the date of publication, Kritika Sarmah did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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