Breaking Down Huntington Ingalls Industries, Inc. (HII) Financial Health: Key Insights for Investors

Are you keeping a close watch on the defense industry and wondering about the financial stability of key players? Have you considered the long-term implications of recent contracts and performance dips for major shipbuilders? In 2024, Huntington Ingalls Industries (HII) reported revenues of $11.5 billion, a slight increase from 2023, but also faced a dip in diluted earnings per share to $13.96 for the year. With a year-end backlog of $48.7 billion and total debt of $3.40 billion, how should investors interpret these figures? Dive in to explore a detailed breakdown of HII's financial health, key insights, and what it all means for your investment strategy.

Huntington Ingalls Industries, Inc. (HII) Revenue Analysis

Understanding Huntington Ingalls Industries, Inc.'s (HII) revenue streams involves dissecting its primary sources, evaluating year-over-year growth, and assessing the contribution of different business segments. A comprehensive analysis reveals the financial dynamics that drive the company's performance.

Huntington Ingalls Industries, Inc. (HII) primarily generates revenue from two main sources:

• Products: Construction and modernization of ships for the U.S. Navy and Coast Guard.
• Services: Providing professional services, including engineering, planning, and fleet maintenance.

Analyzing the year-over-year revenue growth rate provides insights into Huntington Ingalls Industries, Inc.'s (HII) financial trajectory. While specific recent percentage increases/decreases fluctuate, examining historical trends helps to understand the company's growth patterns. For instance, comparing revenue from recent fiscal years highlights whether the company is experiencing growth, stagnation, or contraction.

The revenue contribution from different business segments is crucial for understanding Huntington Ingalls Industries, Inc.'s (HII) financial structure. These segments include:

• Newport News Shipbuilding (NNS): Focuses on designing and building nuclear-powered aircraft carriers and submarines.
• Ingalls Shipbuilding (IS): Specializes in building non-nuclear surface combatants, amphibious assault ships, and cutters.
• Technical Solutions: Delivers professional services, including defense and federal solutions.

The following table illustrates approximate revenue distribution (based on 2024 fiscal year data):

Significant changes in revenue streams can arise from various factors. Recent trends may include increased demand for specific types of naval vessels, shifts in government defense spending, or the acquisition of new contracts. Monitoring these shifts is essential for investors to understand potential impacts on future revenue.

For a deeper dive into the investors profile, check this out: Exploring Huntington Ingalls Industries, Inc. (HII) Investor Profile: Who’s Buying and Why?

Huntington Ingalls Industries, Inc. (HII) Profitability Metrics

When evaluating the financial health of Huntington Ingalls Industries, Inc. (HII), a detailed examination of its profitability metrics is essential. Profitability measures how well a company generates profit from its revenues and invested capital. Key indicators include gross profit, operating profit, and net profit margins, all of which provide insights into the company's efficiency and financial performance.

Let's delve into these critical metrics:

• Gross Profit: This is the profit a company makes after deducting the costs associated with producing and selling its goods or services. For Huntington Ingalls Industries, monitoring gross profit helps assess the efficiency of its production processes and cost of goods sold.
• Operating Profit: This metric reflects the profit earned from a company's core business operations, excluding interest and taxes. Analyzing HII's operating profit margin reveals how well the company manages its operational expenses.
• Net Profit: This is the profit remaining after all expenses, including interest, taxes, and other deductions, have been paid. Net profit margin indicates the overall profitability of Huntington Ingalls Industries, reflecting its ability to convert revenue into profit.

Analyzing trends in these profitability metrics over time provides valuable insights into HII's financial stability and growth trajectory. Comparing these ratios with industry averages helps benchmark the company's performance against its peers, highlighting areas of strength and potential improvement.

Operational efficiency is crucial for maintaining and improving profitability. Effective cost management and favorable gross margin trends directly impact the bottom line. Investors and stakeholders closely monitor these aspects to gauge the company's ability to sustain and grow its profitability.

Here is a look into Huntington Ingalls Industries, Inc. (HII) profitability metrics based on the latest available data:

These metrics provide a snapshot of Huntington Ingalls Industries, Inc. (HII) profitability in fiscal year 2024, offering essential data points for investors and analysts evaluating the company's financial performance and efficiency.

Further insights and analysis can be found at: Breaking Down Huntington Ingalls Industries, Inc. (HII) Financial Health: Key Insights for Investors

Huntington Ingalls Industries, Inc. (HII) Debt vs. Equity Structure

Understanding Huntington Ingalls Industries, Inc. (HII)'s financial health involves analyzing its debt and equity structure. This reveals how the company funds its operations and growth. Let's delve into the specifics of HII's debt levels, ratios, and financing strategies.

As of December 31, 2024, Huntington Ingalls Industries, Inc. (HII) reported the following debt levels:

• Long-term debt: $3.23 billion
• Short-term debt: $14 million

The debt-to-equity ratio is a crucial metric for evaluating a company's financial leverage. Huntington Ingalls Industries, Inc. (HII)’s debt-to-equity ratio can be calculated using the total liabilities and total equity from its balance sheet. As of December 31, 2024, HII's total liabilities were $5.78 billion and total stockholder equity was $1.57 billion. This results in a debt-to-equity ratio of approximately 3.68.

A high debt-to-equity ratio suggests that the company relies more on debt financing compared to equity. It is important to compare this ratio with industry standards to determine whether HII's leverage is within a reasonable range. The aerospace and defense industry often requires significant capital investments, which can lead to higher debt levels. However, a ratio that is significantly higher than its peers could indicate higher financial risk.

Recent activities provide insight into Huntington Ingalls Industries, Inc. (HII)’s debt management:

• In February 2024, HII issued $500 million in aggregate principal amount of 5.000% Senior Notes due 2034.
• As of January 25, 2024, Huntington Ingalls Industries, Inc. (HII) had a senior unsecured credit rating of Baa2 from Moody's and BBB from S&P.

Huntington Ingalls Industries, Inc. (HII) strategically balances debt and equity to fund its operations and growth initiatives. The company's approach to financing involves:

• Debt Financing: Utilizing long-term debt to fund major projects and capital expenditures.
• Equity Funding: Retaining earnings and issuing stock to strengthen its equity base.

The balance between debt and equity allows Huntington Ingalls Industries, Inc. (HII) to maintain financial flexibility while investing in future growth opportunities. Effective management of this balance is vital for sustaining long-term financial health and stability.

Huntington Ingalls Industries, Inc. (HII) Liquidity and Solvency

Assessing Huntington Ingalls Industries, Inc. (HII)'s financial health involves a close look at its liquidity, which indicates its ability to meet short-term obligations. Key metrics for this assessment include the current and quick ratios, working capital trends, and an overview of cash flow statements.

The current ratio, calculated by dividing current assets by current liabilities, provides insight into whether HII has enough short-term assets to cover its short-term liabilities. A ratio above 1 generally suggests good liquidity. The quick ratio, also known as the acid-test ratio, is a more conservative measure as it excludes inventories from current assets, offering a clearer picture of immediately liquid assets available to meet short-term obligations.

Working capital, defined as the difference between current assets and current liabilities, is another vital indicator. Monitoring trends in working capital can reveal whether HII's liquidity position is improving or deteriorating. A positive and increasing working capital balance typically signifies a healthy liquidity position, while a negative or decreasing balance may raise concerns.

Analyzing HII's cash flow statements provides a comprehensive view of its liquidity. The cash flow statement is divided into three sections:

• Operating activities: Cash generated or used from the company's core business operations.
• Investing activities: Cash flow from the purchase and sale of long-term assets.
• Financing activities: Cash flow from debt, equity, and dividends.

By examining these sections, investors can understand how HII generates and uses cash. Positive cash flow from operating activities is particularly important, as it indicates the company's ability to generate cash from its primary business.

Here's a hypothetical overview of HII's cash flow trends based on typical financial analysis:

Any potential liquidity concerns should be carefully evaluated. Factors such as declining cash reserves, increasing debt levels, or negative operating cash flow could signal potential problems. Conversely, strengths such as a strong cash position, consistent positive operating cash flow, and manageable debt levels indicate a solid liquidity foundation. Investors should also consider industry-specific factors and macroeconomic conditions that could impact HII's liquidity.

More insights about the company can be found at Mission Statement, Vision, & Core Values of Huntington Ingalls Industries, Inc. (HII).

Huntington Ingalls Industries, Inc. (HII) Valuation Analysis

To assess whether Huntington Ingalls Industries, Inc. (HII) is overvalued or undervalued, several key financial metrics and market indicators must be examined. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios (if applicable), and analyst consensus on stock valuation. These indicators provide a comprehensive view of the company's financial health and market perception.

As of the fiscal year 2024, here's a snapshot of Huntington Ingalls Industries, Inc. (HII)'s valuation indicators:

• Price-to-Earnings (P/E) Ratio: The P/E ratio, a key metric for evaluating a company's stock price relative to its per-share earnings, currently stands at 24.85. This indicates how much investors are willing to pay for each dollar of HII's earnings.
• Price-to-Book (P/B) Ratio: The P/B ratio, which compares a company's market capitalization to its book value of equity, is at 3.41. This ratio can provide insights into whether the stock is undervalued or overvalued based on its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio, a valuation multiple that measures a company's total value relative to its earnings before interest, taxes, depreciation, and amortization, is 14.86. This ratio is often used to assess whether a company is fairly priced compared to its peers.

Analyzing these ratios in isolation is not enough; they should be compared against industry averages and historical data to provide a more meaningful perspective. For instance, if the industry average P/E ratio is significantly lower than HII's, it might suggest that the stock is overvalued, and vice versa.

Here is a table summarizing the valuation ratios:

Stock price trends and dividend information further enrich the valuation analysis:

• Stock Price Trends: Over the past 12 months, Huntington Ingalls Industries, Inc. (HII) has shown a stock price increase from $238.94 on April 18, 2024, to $275.66 on April 17, 2025.
• Dividend Yield and Payout Ratios: As of December 31, 2024, the annual dividend per share was $5.20, with a payout ratio of 30.60%. The dividend yield, calculated based on the stock price, provides insight into the return on investment from dividends.

Lastly, analyst consensus plays a crucial role in determining market sentiment and potential stock performance. Current analyst ratings provide a consolidated view on whether the stock is expected to outperform, underperform, or maintain its current trajectory.

For further insights into who is investing in Huntington Ingalls Industries, Inc. (HII) and why, consider exploring: Exploring Huntington Ingalls Industries, Inc. (HII) Investor Profile: Who’s Buying and Why?

Huntington Ingalls Industries, Inc. (HII) Risk Factors

Huntington Ingalls Industries, Inc. (HII) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges.

Here's a breakdown of some key risk areas:

• Industry Competition: The defense industry is highly competitive.
• Regulatory Changes: Government regulations and policies can change, affecting contracts and operations.
• Market Conditions: Economic downturns or shifts in defense spending priorities can impact revenue.

Huntington Ingalls Industries, Inc. (HII)'s annual report details various risk factors that could affect its business, financial condition, and future prospects. Here’s an overview of some key risks, based on the latest filings:

Operational Risks:

HII's performance is tied to its ability to efficiently manage complex projects. Potential issues include:

• Cost Overruns: Unexpected expenses can cut into profit margins.
• Schedule Delays: Missing deadlines can lead to penalties and reputational damage.
• Technical Issues: Problems with design or production can disrupt projects.

Financial Risks:

Financial risks for Huntington Ingalls Industries, Inc. (HII) include:

• Debt Levels: High debt could limit flexibility for investments.
• Interest Rate Fluctuations: Changes in interest rates can increase borrowing costs.
• Pension Obligations: Managing pension liabilities requires careful planning.

Strategic Risks:

Strategic risks for Huntington Ingalls Industries, Inc. (HII) involve:

• Dependence on Government Contracts: Reliance on government contracts makes HII vulnerable to budget cuts.
• Cybersecurity Threats: Cyber attacks could compromise sensitive information and disrupt operations.
• Geopolitical Instability: Global events can impact defense spending and international collaborations.

While specific mitigation strategies are not always detailed, Huntington Ingalls Industries, Inc. (HII) likely employs various measures to address these risks, such as:

• Risk Management Programs: Implementing processes to identify, assess, and mitigate risks.
• Contract Negotiations: Working closely with customers to establish fair terms and manage expectations.
• Diversification Efforts: Exploring new markets and technologies to reduce dependence on specific areas.

A closer look at Huntington Ingalls Industries, Inc. (HII)'s financial health can be found here: Breaking Down Huntington Ingalls Industries, Inc. (HII) Financial Health: Key Insights for Investors

Huntington Ingalls Industries, Inc. (HII) Growth Opportunities

Huntington Ingalls Industries, Inc. (HII) faces a dynamic future shaped by strategic initiatives, market positioning, and external economic factors. As the largest military shipbuilder in the United States, HII's growth prospects are intertwined with U.S. Navy plans, defense spending trends, and its ability to innovate and adapt to evolving industry demands. Here’s an analytical overview of HII's potential growth drivers:

Analysis of Key Growth Drivers:

• Product Innovations: Huntington Ingalls is actively integrating advanced technologies like additive manufacturing (3D printing) to revolutionize shipbuilding. The installation of the first-ever 3D-printed valve manifold on the USS Enterprise (CVN 80) signifies a leap in speed and precision, potentially reducing costs and improving efficiency.
• Market Expansions: HII is expanding its footprint geographically and diversifying its service offerings. This includes expanding into Texas, Louisiana, Norfolk, Virginia and South Carolina to tap into available labor markets and increase production throughput.
• Strategic Initiatives: HII is focused on modernizing its shipyards, investing $4.1 billion to add 480,000 square feet of new manufacturing space integrated with automation tools. These investments are expected to improve margins in the long run.

Future Revenue Growth Projections and Earnings Estimates:

Huntington Ingalls anticipates robust revenue growth in its shipbuilding and Mission Technologies segments. Key projections include:

• Shipbuilding Revenue: For fiscal year 2025, HII projects shipbuilding revenue between $8.9 billion and $9.1 billion.
• Mission Technologies Revenue: The company expects Mission Technologies to generate revenue between $2.9 billion and $3.1 billion in FY25.
• Overall Revenue Growth: HII forecasts mid-to-long-term revenue growth of over 4%.

Analysts predict earnings should grow by 10% each year over the next three years.

Strategic Initiatives or Partnerships That May Drive Future Growth:

Several strategic moves and partnerships are expected to bolster HII's growth trajectory:

• AUKUS Alliance: HII is leveraging its nuclear shipbuilding expertise for the AUKUS security pact, strengthening ties between Australia, the U.S., and the United Kingdom. Michael Lempke is leading HII's Australian business efforts, focusing on unmanned systems, C5ISR operations, AI, machine learning, and nuclear shipbuilding.
• Workforce Development: HII has formed an AUKUS Workforce Alliance with Babcock Australasia, partnering with Australian universities to build a workforce supportive of AUKUS initiatives.
• Executive Order: President Trump signed an executive order aimed at restoring American maritime dominance, which is expected to provide a favorable environment for Huntington Ingalls.

Competitive Advantages That Position the Company for Growth:

Huntington Ingalls possesses several unique competitive advantages:

• Market Dominance: HII is the largest military shipbuilder in the U.S. and the sole manufacturer of nuclear-powered aircraft carriers, ensuring a steady stream of government orders.
• Economic Moat: The company has a wide Morningstar Economic Moat Rating, indicating strong competitive advantages that protect its market share and profitability.
• Long-Term Contracts: HII benefits from long lead times and block purchases, providing visibility into long-term revenue and making its top line less sensitive to defense budget changes.
• Skilled Workforce: HII's skilled workforce is essential for complex shipbuilding and technical solutions, enabling it to maintain its competitive edge in various defense sectors.

To get more insights into Huntington Ingalls Industries, Inc. (HII) financial health, read Breaking Down Huntington Ingalls Industries, Inc. (HII) Financial Health: Key Insights for Investors