Huntington Ingalls Industries, Inc. HII is all set to unveil its fourth-quarter and full-year 2023 results on Feb 1, before the market opens. The company has a track record of delivering an average earnings surprise of 4.68% in the trailing four quarters.
The upcoming earnings report is expected to reflect the business segment’s mixed revenue performance at Huntington Ingalls, influencing its overall top line.
Ingalls: Revenue Performance Outlook
While higher revenues from surface combatants are likely to have bolstered this segment’s revenue performance, the impact might have been dampened by lower revenues from the National Security Cutter program. The anticipated decline in revenues for Ingalls is resonated in the Zacks Consensus Estimate for the segment’s fourth-quarter revenues, standing at $646.7 million, foretelling a 1.7% dip from the previous year’s figures.
Newport News: Insights and Expectations
The Newport News segment is expected to have witnessed a mixed revenue performance, with stronger contributions from aircraft carriers and submarines. However, a potential drag on the top-line performance could be inferred from lower volumes from aircraft carrier refueling and complex overhaul (RCOH).
Prospects for Mission Technologies
The Mission Technologies segment is likely to have experienced a positive momentum in revenue performance, driven by higher volumes of mission-based solutions. The Zacks Consensus Estimate for Mission Technologies’ fourth-quarter revenues suggests a 4.9% surge from the year-ago quarter’s reported figure, reaching $631.4 million.
Fourth-Quarter Estimates and Beyond
Considering the mixed sales expectations across HII’s business segments, a moderate impact on the company’s overall top line is expected. The Zacks Consensus Estimate for sales is currently pegged at $2.76 billion, indicating a decrease of 1.9% from the prior-year reported number.
Moving beyond segmental sales, margin improvement in the majority of its segments is likely to have contributed to HII’s fourth-quarter bottom line. The outlook also foresees gradually stabilizing supply-chain issues potentially favorably impacting HII’s earnings performance.
Moreover, the Zacks Consensus Estimate for the company’s fourth-quarter earnings indicates an improvement of 39.1% from the prior-year reported figure, standing at $4.27 per share.
A Look Through the Zacks Model
The Zacks model does not conclusively predict an earnings beat for Huntington Ingalls this time around. The company’s current Earnings ESP of -2.46% and Zacks Rank #3 do not yield a favorable combination for projecting an earnings beat. A positive Earnings ESP in conjunction with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) typically increases the chances of an earnings beat.
Stocks Under the Radar
On the flip side, several defense stocks have the potential to post an earnings beat this reporting cycle. CAE Inc. and Leidos Holdings, Inc. are two names with the right combination of elements to watch out for.
CAE, which has an Earnings ESP of +7.18% and a Zacks Rank #3, is set to release third-quarter fiscal 2024 results on Feb 14. On the other hand, Leidos, with an Earnings ESP of +1.88% and a Zacks Rank #2, is scheduled to unveil its fourth-quarter results on Feb 13.
Noteworthy Release in the Defense Space
Amidst the hustle in the defense space, RTX Corporation recently reported its fourth-quarter 2023 results, which included adjusted earnings per share that beat the Zacks Consensus Estimate by 3.2%. The company’s bottom line also exhibited a 1.6% improvement from the year-ago quarter’s comparable level.
The company’s fourth-quarter adjusted sales totaled $19,824 million, showing a marked growth from $18,093 million in the same quarter of 2022.
For a comprehensive rundown of earnings announcements, investors can refer to the Zacks Earnings Calendar.
The views and opinions expressed herein do not necessarily reflect those of Nasdaq, Inc.
