HII
IndustrialsHuntington Ingalls Industries
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XBRL · SEC EDGAR2009–2025(17yr)| Metric | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $6.3B | $6.7B | $6.6B | $6.7B | $6.8B | $7.0B | $7.0B | $7.1B | $7.4B | $8.2B | $8.9B | $9.4B | $9.5B | $10.7B | $11.5B | $11.5B | $12.5B | +8.2% |
| Gross Profit | $1.9B | $1.7B | $1.8B | $1.9B | $2.1B | $2.5B | $2.7B | $2.7B | $3.0B | — | — | — | — | — | — | — | — | — |
| Gross Margin | 29.8% | 25.0% | 27.1% | 28.0% | 31.2% | 35.5% | 38.5% | 38.0% | 40.3% | — | — | — | — | — | — | — | — | — |
| Operating Income | $211.0M | $248.0M | $110.0M | $358.0M | $512.0M | $655.0M | $769.0M | $858.0M | $865.0M | $951.0M | $736.0M | $799.0M | $513.0M | $565.0M | $781.0M | $535.0M | $657.0M | +22.8% |
| Operating Margin | 3.4% | 3.7% | 1.7% | 5.3% | 7.5% | 9.4% | 11.0% | 12.1% | 11.6% | 11.6% | 8.3% | 8.5% | 5.4% | 5.3% | 6.8% | 4.6% | 5.3% | +0.6pp |
| Net Income | $124.0M | $135.0M | -$94.0M | $146.0M | $261.0M | $338.0M | $404.0M | $573.0M | $479.0M | $836.0M | $549.0M | $696.0M | $544.0M | $579.0M | $681.0M | $550.0M | $605.0M | +10.0% |
| Net Margin | 2.0% | 2.0% | -1.4% | 2.2% | 3.8% | 4.9% | 5.8% | 8.1% | 6.4% | 10.2% | 6.2% | 7.4% | 5.7% | 5.4% | 5.9% | 4.8% | 4.8% | +0.1pp |
| Free Cash Flow | -$269.0M | $168.0M | $331.0M | $170.0M | $97.0M | $551.0M | $640.0M | $537.0M | $432.0M | $451.0M | $366.0M | $740.0M | $429.0M | $482.0M | $678.0M | $26.0M | $794.0M | +2953.8% |
| FCF Margin | -4.3% | 2.5% | 5.0% | 2.5% | 1.4% | 7.9% | 9.1% | 7.6% | 5.8% | 5.5% | 4.1% | 7.9% | 4.5% | 4.5% | 5.9% | 0.2% | 6.4% | +6.1pp |
| EPS (Diluted) | $2.54 | $2.77 | $-1.93 | $2.91 | $5.18 | $6.86 | $8.36 | $12.14 | $10.46 | $19.09 | $13.26 | $17.14 | $13.50 | $14.44 | $17.07 | $13.96 | $15.39 | +10.2% |
1. THE BIG PICTURE
Huntington Ingalls Industries occupies a paradoxical position: it is a vital national monopoly that struggles with bottom-tier financial efficiency. While it is the only company capable of building and refueling the U.S. Navy’s nuclear-powered aircraft carriers, this "exclusive" status has not translated into the high-margin profile typical of its defense peers. The business is currently a high-volume, low-margin utility for the U.S. government, where operational "momentum" in shipbuilding is constantly at war with a restrictive cost structure.
2. WHERE THE RISKS HIT HARDEST
Huntington Ingalls Industries’s "Exclusive Capabilities" in nuclear shipbuilding (10-K Item 1) are directly threatened by its "Contract Cost Growth" risks. Because Huntington Ingalls Industries is the sole provider for programs like the Gerald R. Ford class carriers, any technical challenge or labor shortage becomes its problem alone to solve. This vulnerability is magnified by the fact that 46% of 2025 revenue came from fixed-price incentive contracts. Unlike cost-plus contracts, these agreements limit Huntington Ingalls Industries’s ability to pass on cost overruns to the U.S. Navy. Consequently, the very complexity that creates its "Regulatory Moat" also creates a ceiling on profitability; if actual costs exceed estimates due to a tight labor market, Huntington Ingalls Industries’s operating income is reduced dollar-for-dollar.
3. WHAT THE NUMBERS SAY TOGETHER
The most recent quarterly results show a company running at full throttle, with revenues jumping to $3.5 billion led by 20.8% growth at Ingalls Shipbuilding (8-K). However, the peer benchmarking data reveals that this activity is remarkably inefficient compared to the broader industry. Huntington Ingalls Industries carries an operating margin of just 4.8%—the lowest among its peers and less than half the margins of Lockheed Martin (10.5%) or General Dynamics (10.2%).
This divergence between high revenue growth (+8.2% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter) and low profitability suggests that Huntington Ingalls Industries’s current "shipbuilding throughput" is being achieved at a high cost. Furthermore, Huntington Ingalls Industries returns very little to shareholders, ranking last among peers with a buyback yield of only 0.2%. With short interest at 4.2% of the float, there is a measurable level of market skepticism regarding whether Huntington Ingalls Industries can maintain its current growth trajectory without further margin erosion.
4. IS IT WORTH IT AT THIS PRICE?
At a forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 20.7x, the market is pricing in approximately 1.2% long-term growth (CAPM analysis). This represents a modest discount to the peer median of 24.5x, a valuation gap justified by Huntington Ingalls Industries’s structural disadvantages. While Huntington Ingalls Industries has a stronger revenue growth rate than Northrop Grumman or Lockheed Martin, its net margin of 4.7% is the lowest in the group.
The current price is only "right" if Huntington Ingalls Industries can avoid the catastrophic cost overruns inherent in its fixed-price contract mix. According to sensitivity analysis, if Huntington Ingalls Industries could align its growth with the broader GDP pace of 2.5%, the justified multiple would jump to 28.2x. However, given that Huntington Ingalls Industries has 7.5x net leverage (net debt of $3.2 billion vs. $0.4 billion in annual FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders), there is little room for error. Investors are paying a lower multiple because the risk of a federal budget impasse or a government-owned shipyard entering the carrier refueling market could easily derail the 1.2% growth the market currently expects.
5. WHAT WOULD CHANGE THIS VIEW?
- Constructive if the operating margin moves toward the 10% peer average, signaling that Huntington Ingalls Industries has successfully mitigated labor-related cost growth on its fixed-price contracts.
- Cautious if the U.S. Government exercises its right to terminate contracts for convenience or if the Mission Technologies segment continues to see lower volumes in All-Domain Operations, which would further concentrate risk in the capital-intensive shipbuilding segments.
6. BOTTOM LINE
Structural Advantage: Absolute monopoly on the construction, refueling, and inactivation of U.S. nuclear-powered aircraft carriers and amphibious assault ships.
Bottom Line: Huntington Ingalls Industries is a critical piece of national infrastructure masquerading as a commercial enterprise, but its poor margin profile and high debt make it a laggard in a high-performing sector.
1. Top 5 Material Risks
- U.S. Government Dependency: Substantially all of Huntington Ingalls Industries’ 2025 revenue was derived from U.S. Government contracts. Changes in defense priorities, federal budget impasses, or government shutdowns can delay payments, cancel programs, or reduce funding for existing contracts.
- Contract Cost Growth: Profitability is sensitive to the accuracy of estimates for revenues and costs at completion. If actual costs exceed estimates—due to inflation, labor shortages, or technical challenges—and Huntington Ingalls Industries cannot recover these costs through equitable adjustments or engineering change proposals, operating income is directly reduced.
- Fixed-Price Contract Exposure: Approximately 46% of 2025 revenue was generated under fixed-price incentive contracts, which carry higher financial risk than cost-type contracts (50% of 2025 revenue) because they limit Huntington Ingalls Industries’s ability to pass on cost overruns to the customer.
- Competitive Environment: The shipbuilding market is highly concentrated, and Huntington Ingalls Industries faces intense competition for surface combatants, submarines, and large deck amphibious ships. The potential for U.S. Government-owned shipyards to enter the nuclear-powered aircraft carrier refueling market poses a specific threat to a segment where Huntington Ingalls Industries is currently the sole provider.
- Workforce and Talent Retention: Huntington Ingalls Industries faces intense competition for skilled labor, including engineers and nuclear-qualified tradespeople. A significant portion of the workforce is nearing retirement, and failure to attract or retain qualified personnel has already resulted in unexpected inefficiencies and rework on long-term contracts.
2. Company-Specific Risks
- Nuclear Operations Liability: Huntington Ingalls Industries’ nuclear-related activities, including the construction and refueling of aircraft carriers and submarines, expose Huntington Ingalls Industries to potential liabilities for environmental contamination or nuclear incidents that may not be fully covered by government indemnification or insurance.
- Classified Program Opacity: A portion of revenue is derived from classified programs, which limits investor insight into the specific risks, disputes, or claims associated with these contracts.
- Artificial Intelligence Governance: Huntington Ingalls Industries utilizes AI tools to optimize processes and enhance productivity; however, flawed AI outputs or adversarial attacks (such as data poisoning) could lead to operational inefficiencies or legal liability.
- Collective Bargaining: Approximately 45% of the workforce is covered by 13 collective bargaining agreements. Failure to successfully renegotiate these agreements could lead to work stoppages or strikes, disrupting program performance.
3. Regulatory/Legal Risks
- Government Audits: Huntington Ingalls Industries is subject to routine oversight by the DCAA and DCMA. Negative findings regarding business systems or cost structures can lead to withheld contract payments, fines, penalties, or the disallowance of costs.
- Environmental Liability: Operations are subject to strict liability for environmental cleanup and remediation under laws like the Clean Air Act and Clean Water Act. Violations can result in a facility being placed on a list that prohibits it from performing on U.S. Government contracts.
- Intellectual Property Disputes: The U.S. Government often takes aggressive positions regarding "government use rights" for intellectual property developed under contracts, which may limit Huntington Ingalls Industries’s ability to protect its proprietary technology.
- Tax Law Changes: Huntington Ingalls Industries is subject to evolving tax regulations, including the impact of Public Law 119-21, which affects the timing of deductions for research and development expenditures and bonus depreciation.
4. Financial Impact Map
U.S. Government Dependency → Revenue → Substantially all 2025 revenue derived from U.S. Government contracts. Contract Cost Growth → Operating Income → Increased costs without corresponding revenue adjustments directly reduce profitability. Fixed-Price Contract Exposure → Operating Income → 46% of 2025 revenue is subject to higher financial risk where cost overruns may not be recoverable. Workforce Inefficiency → Operating Income → Labor shortages and rework requirements negatively impact performance milestones and earnings. Goodwill/Intangible Impairment → Total Assets → Goodwill (21% of total assets) and purchased intangible assets (5% of total assets) are subject to write-downs if expected cash flows decrease.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 8-K | Feb 2026 | — |
| 10-K | Feb 2026 | Dec 2025 |
| 10-Q | Oct 2025 | Sep 2025 |
| 14A | Mar 2025 | — |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Huntington Ingalls signs MOU with GrayMatter Robotics to integrate physical AI in shipbuilding
- ▸Signed MOU with GrayMatter Robotics for physical AI in shipbuilding and manufacturing
- ▸Targeting 20% throughput improvement plan to enhance cash flow and earnings consistency
- ▸Current share price $379.90 with estimated fair value of $404.90
- ▸1-year total shareholder return of 91.39%
- ▸Growth narrative relies on long-dated contract pipeline and supply chain stabilization
Huntington Ingalls Q4 Revenue $3.48B Beats Estimates, Warns of Q1 Negative Free Cash Flow
- ▸Q4 revenue $3.48B, exceeding analyst estimates of $3.1B
- ▸Q4 EPS $4.04, beating consensus estimate of $3.88
- ▸Company warned of potential negative free cash flow in Q1
- ▸Stock closed 10.6% lower on February 5, 2025 following earnings release
- ▸US Navy awarded contract for small surface combatant warships on December 22
Huntington Ingalls Fair Value Target Raised to $403 Amid Mixed Analyst Sentiment
- ▸Fair value price target increased to $403.00 from $380.60
- ▸TD Cowen and Citi raised price targets to $460 and $450 respectively
- ▸Union shipbuilders ratified agreements with 18% immediate base wage increase
- ▸Projected wage growth of 35% to 47% for union staff through 2031
- ▸Goldman Sachs removed HII from US Conviction List citing policy uncertainty
Huntington Ingalls wins $95.7M contract for USS Nimitz inactivation and defueling
- ▸Contract value $95.7 million awarded by Naval Sea Systems Command
- ▸Work involves advance planning and long-lead-time material procurement
- ▸Project completion expected by March 2027
- ▸Work to be performed in Newport News, Virginia
- ▸Company backlog totaled $53.14 billion at end of Q4 2025
Anduril Wins $20B Army Contract; RTX Lands $2B Award; HII Tapped for Decommissioning
- ▸Anduril awarded $20 billion U.S. Army contract
- ▸RTX secured separate $2 billion defense award
- ▸Huntington Ingalls Industries selected for aircraft carrier decommissioning
- ▸Anduril expands role as key U.S. Army supplier
- ▸Contracts represent significant multi-year defense spending allocation
HII Ingalls Shipbuilding ratifies union contract with 18% immediate base wage increase
- ▸Immediate 18% or higher base wage increase for union-represented shipbuilders
- ▸Total wage growth of 35% to 47% through March 2031
- ▸Largest single wage increase in Ingalls Shipbuilding history
- ▸Agreement covers five collective bargaining units at Ingalls division
- ▸Contract extension secures labor stability through March 8, 2031