Financial Data and Key Metrics Changes - The company aims to increase throughput by 20% this year compared to last year, alongside significant cost savings across all business segments [3] - The company has a free cash flow guidance of $300 million to $500 million for the year, with performance on ship deliveries and contract negotiations influencing the outcome [112] Business Line Data and Key Metrics Changes - The company secured two ships under contract in Block V at the end of Q1, with plans to contract the next 15 submarines, which will provide a solid workload for the next 15 to 20 years [3][9] - The company is focused on improving retention and increasing outsourcing and insourcing to enhance throughput [31] Market Data and Key Metrics Changes - There is significant demand for both defense and commercial shipbuilding, with the company expressing confidence in the outlook for the next decade [6][9] - The company has seen a stable supply chain post-COVID, with investments flowing into the supply chain helping to stabilize operations [26] Company Strategy and Development Direction - The company is prioritizing execution in shipbuilding, with a focus on increasing throughput and reducing costs [3] - The establishment of a White House office for shipbuilding is viewed positively, as it provides a voice for the administration to the Navy and Congress [12][13] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the support for shipbuilding from the government and believes that the demand will continue to grow [6][9] - The company is working closely with the Navy and Electric Boat to analyze investments required to increase throughput and achieve necessary margins [59] Other Important Information - The company is addressing labor challenges by focusing on hiring more experienced personnel and increasing wages to attract high-quality individuals [22][56] - The company has a significant backlog in Mission Technologies, with nearly $12 billion in awards last year, indicating strong performance in that segment [101] Q&A Session Summary Question: What are the company's most important priorities right now? - The company emphasizes execution, increasing throughput, and securing new contracts as its main priorities [3] Question: How does the reconciliation bill impact shipbuilding? - Management believes the reconciliation bill provides significant support for shipbuilding, although the specifics of its interaction with the 2026 budget are still unclear [6] Question: What is the outlook for the Columbia Class Bill? - The company reports that the second boat is progressing well, with significant learning from the first boat leading to improved cost performance [44] Question: How is the company managing labor challenges? - The company is focusing on hiring experienced workers and increasing wages to reduce attrition and improve workforce quality [22][56] Question: What are the expectations for future cash flow? - Future cash flow will depend on executing ship deliveries and achieving throughput goals, with potential for higher cash flow if these targets are met [112] Question: What is the company's strategy for Mission Technologies? - The company is bundling capabilities in electronic warfare, C5ISR, and uncrewed vehicles to pursue government contracts effectively [99][100]

Core Insights - HII hosted members of the UK House of Commons Defence Committee to support the AUKUS partnership, focusing on providing Australia with nuclear-powered submarines and advanced capabilities [2][3][6] Group 1: AUKUS Partnership - The visit by the Defence Committee was aimed at reinforcing the trilateral AUKUS partnership, which involves Australia, the UK, and the US [2][3] - HII is committed to supporting AUKUS objectives, including the construction of nuclear-powered submarines and enhancing industrial capacity across the involved nations [6][7] Group 2: Workforce Development - HII showcased its workforce development expertise during the visit, emphasizing the importance of skilled labor in supporting AUKUS initiatives [3][6] - The company is a founding member of the AUKUS Workforce Alliance, aimed at preparing a skilled workforce for Australia's nuclear-powered submarine program [7] Group 3: Industrial Capabilities - HII's Newport News Shipbuilding division is one of only two shipyards capable of designing and building nuclear-powered submarines for the US Navy [7] - The integration of submarine and shipbuilding capabilities among the US, UK, and Australia is crucial for aligned defense production and supply chain collaboration [6][7]

Core Viewpoint - Huntington Ingalls Industries (HII) presents a strong investment opportunity in the Aerospace Defense industry due to rising earnings estimates, robust return on equity (ROE), effective debt management, a solid backlog, and shareholder-friendly initiatives [1] Earnings Growth and Revenue Forecast - The Zacks Consensus Estimate for HII's 2025 earnings per share (EPS) has increased by 3.3% to $14.31 per share over the past 30 days [2] - The total revenue estimate for HII in 2025 is $11.91 billion, reflecting a year-over-year growth of 3.3% [2] - HII's earnings growth rate over the next three to five years is projected at 11% [3] - The company has consistently surpassed earnings expectations, achieving an average earnings surprise of 4.20% in the last four quarters [3] Return on Equity - HII's current ROE stands at 12.26%, outperforming the industry average of 10.75%, indicating more effective use of funds compared to peers [4] Shareholder Initiatives - HII has been enhancing shareholder value through dividends, currently paying a quarterly dividend of $1.35 per share, which translates to an annualized dividend of $5.40 [5] - The company's dividend yield is 2.40%, surpassing the Zacks S&P 500 Composite's average of 1.27% [5] - In the first quarter of 2025, HII paid dividends totaling $53 million [5] Backlog and Order Growth - HII's order growth remains strong, with new contract awards valued at nearly $2.1 billion in the first quarter of 2025, leading to a total backlog of $48.05 billion as of March 31, 2025 [6] - This significant backlog is favorable for the company's revenue generation prospects in the coming years [6] Debt Profile - HII's total debt to capital ratio is 40.15%, which is better than the industry average of 52.09% [7] - The times interest earned (TIE) ratio at the end of the first quarter of 2025 was 7.3, indicating the company can comfortably meet its interest payment obligations [7] Stock Performance - Over the past three months, HII shares have increased by 28%, significantly outperforming the industry's growth of 8% [8]

Industry Overview - The aerospace defense industry is experiencing growth despite supply-chain challenges, driven by increased defense budgets and positive projections for global air passenger numbers in the second half of 2025 [1][3] - A White House report indicates a proposed 13% increase in U.S. defense spending to $1.01 trillion for fiscal year 2026, which is expected to benefit defense-focused companies [4] - The Zacks-defined Aerospace – Defense Industry ranks in the top 16% of Zacks Industry Rank, suggesting it will outperform the market in the next three to six months [5] Company Summaries GE Aerospace - GE Aerospace is seeing strong demand for commercial engines and propulsion technologies, supported by rising defense budgets and geopolitical tensions [8] - The company raised its dividend by 28.6% to 36 cents per share in February 2025, with expected organic revenue growth in the low-double-digit range for 2025 [9] - GE Aerospace has an expected revenue growth rate of -6.8% and an earnings growth rate of 19.6% for the current year [9] Howmet Aerospace Inc. - Howmet Aerospace is benefiting from robust momentum in the commercial aerospace market and strength in its defense business due to rising defense budgets [10] - The company has a strong liquidity position and expects revenue and earnings growth rates of 8.5% and 28.6%, respectively, for the current year [11] Leidos Holdings Inc. - Leidos Holdings reported strong earnings and revenue growth, with increased contract wins from the Pentagon leading to a solid backlog of $46.30 billion [12][14] - The company is well-positioned to contribute to the development of a next-generation missile defense shield, with expected revenue and earnings growth rates of 2.7% and 4.3%, respectively, for the current year [14] Huntington Ingalls Industries Inc. - Huntington Ingalls is a leading U.S. shipbuilder with a solid order backlog, driven by strong demand for its nuclear-powered aircraft carriers and submarines [15][16] - The company expects revenue and earnings growth rates of 3.3% and 2.5%, respectively, for the current year [17] Vertical Aerospace Ltd. - Vertical Aerospace is focused on designing and manufacturing zero-emission electric vertical takeoff and landing (eVTOL) aircraft, with significant growth potential in the advanced air mobility market [18] - The company has an expected revenue growth rate of 1% and an earnings growth rate of over 100% for the current year [19]

Company Overview - HII is a global, all-domain defense provider focused on delivering powerful ships and solutions to protect peace and freedom worldwide [2] - As the largest military shipbuilder in the U.S., HII has a history of over 135 years in advancing national security [3] - The company employs a workforce of 44,000 [3] Upcoming Events - HII will participate in Bernstein's Strategic Decisions Conference on May 28, with a conversation featuring President and CEO Chris Kastner scheduled for 3:30 p.m. Eastern time [1]

Core Viewpoint - Huntington Ingalls Industries (HII) has shown strong stock market performance in 2025, delivering a 21% return to shareholders year to date [1] Group 1: Company Overview - Huntington Ingalls Industries is the largest military shipbuilder in the United States, poised to benefit from increased funding for domestic shipbuilding programs proposed by the new Trump administration [2] - The company has a significant order backlog of $48 billion and anticipates over $50 billion in additional awards in the next 20 months, enhancing its earnings potential [9] Group 2: National Security Role - The company plays a critical role in national security by constructing advanced naval vessels, including the only U.S. facility capable of building Gerald R. Ford-class aircraft carriers [4] - Huntington Ingalls also produces Arleigh Burke-class destroyers and develops uncrewed undersea vehicles, showcasing its diverse defense capabilities [5][6] Group 3: Impact of Trump's Defense Agenda - The Trump administration's focus on revitalizing U.S. military strength and enhancing domestic shipbuilding capabilities is expected to benefit Huntington Ingalls [7][8] Group 4: Financial Performance and Growth Outlook - In Q1, Huntington Ingalls reported revenue of $2.7 billion, a 2.5% decline year over year, but earnings per share (EPS) of $3.97 exceeded expectations [10] - The company projects full-year shipbuilding revenue between $8.9 billion and $9.1 billion, indicating a 3% increase from 2024 [10] - A new production site near Charleston, South Carolina, is expected to increase capacity by 20%, supporting future growth [11] Group 5: Dividend and Valuation - Huntington Ingalls has a quarterly dividend of $1.35 per share, yielding 2.31%, and has increased its annual dividend for the past 13 years, indicating potential for future growth [11] - The company trades at a forward price-to-earnings (P/E) ratio of 16, which is lower than the average of 19 for its defense sector peers, suggesting it may be undervalued [13][14] Group 6: Investment Perspective - The overall outlook for Huntington Ingalls is positive, with strong fundamentals and strategic positioning in the defense sector making it an attractive option for investors [16]

Industry Overview - The Zacks Aerospace-Defense industry includes companies that design and manufacture military and commercial aircraft, combat vehicles, missiles, and space transportation vehicles [2] - It also encompasses cybersecurity firms providing IT services and C4ISR solutions, along with defense contractors offering spare parts and maintenance services [3] Key Trends - Improved air traffic outlook is boosting growth prospects, with global air passenger traffic revenue per kilometer increasing by 3.3% year over year to 738.8 billion [4] - The U.S. defense budget is projected to increase by 13% to $1.01 trillion for fiscal year 2026, which will benefit defense-focused companies [5] - Supply-chain disruptions continue to pose challenges, particularly affecting smaller suppliers in the commercial aerospace sector, with a projected drop in aircraft deliveries from 2,293 to 1,802 in 2025 due to these bottlenecks [6][7] Industry Performance - The Aerospace-Defense industry has underperformed compared to the Zacks S&P 500 composite and its own sector, with a collective gain of 7.2% over the past year, while the Aerospace sector grew by 11.9% and the S&P 500 by 8.3% [12] - The industry currently holds a Zacks Industry Rank of 92, placing it in the top 37% of over 250 Zacks industries, indicating positive near-term prospects [9] Valuation Metrics - The industry is trading at a trailing 12-month EV/Sales ratio of 2.82, compared to the S&P 500's 4.86 and the sector's 2.51 [15] Company Highlights - **Airbus Group**: Revenues improved by 6% year over year, with earnings per share increasing by 33%. The 2025 sales estimate is $82.57 billion, reflecting a 10.4% increase from the previous year [18][19] - **Leidos Holdings**: Revenues grew by 7% year over year to $4.25 billion, with adjusted earnings up by 30%. The 2025 sales estimate indicates a 2.7% improvement from 2024 [22][23] - **Huntington Ingalls Industries**: Received orders worth $2.1 billion in the first quarter, with a total backlog of $48 billion as of March 31, 2025. The 2025 sales estimate shows a 3.5% increase from 2024 [26][27]

Group 1: Deere (DE) - Deere's stock has increased over 16% year-to-date, driven by optimism regarding easing trade tensions [3] - The company reported a first-quarter net income of $869 million, with a full-year forecast of $5 billion to $5.5 billion, but faced a 30% revenue decline and a 50% drop in net income compared to the previous year [5] - Deere's supply chain is relatively protected against tariffs due to domestic manufacturing, and the company is expected to address supply chain adjustments in its upcoming earnings call [9] Group 2: Energy Transfer (ET) - Energy Transfer has a distribution yield of 7.5% and plans to invest $5 billion in growth capital expenditures in 2025, significantly higher than its maintenance capital expenditures of $1.1 billion [12] - The company is in discussions to develop a large LNG export facility in Lake Charles, Louisiana, which could enhance its position in the energy market [13] - The current administration's business-friendly policies are expected to support the development of U.S. energy assets, benefiting companies like Energy Transfer [11] Group 3: Huntington Ingalls Industries (HII) - Huntington Ingalls' shares have risen over 20% in 2025, contrasting with a nearly 4% dip in the S&P 500, and the company offers a forward yield of 2.3% [14] - The company reported first-quarter revenue of $2.7 billion, below expectations, but exceeded earnings estimates with an EPS of $3.79 [15] - Management reaffirmed a 2025 forecast of shipbuilding revenue between $8.9 billion and $9.1 billion, alongside a free cash flow projection of $300 million to $500 million [16]

Group 1 - More than two dozen high school seniors have accepted job offers to start their shipbuilding careers at HII's Newport News Shipbuilding division [1] - The Newport News Shipbuilding division participated in the NHREC Good Life Solution Program's Career Selection Day, where 18 students accepted employment offers for full-time positions or apprenticeships [2] - The Apprentice School offers tuition-free apprenticeships in 19 trades and seven optional programs, funded by HII to develop the next generation of shipbuilders [2][4] Group 2 - The Good Life Solution Program aims to enhance recruitment, hiring, training, and retention of entry-level hires from high schools through partnerships between NHREC and local employers [3] - A ceremony was held to recognize students from the Youth Builders program, with 13 students accepting offers to attend The Apprentice School [4] - HII's mission is to deliver powerful ships and all-domain solutions to support national security, with a workforce of 44,000 [7][8]

Investors interested in Aerospace - Defense stocks are likely familiar with Huntington Ingalls (HII) and RTX (RTX) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific ...