Core Insights - The company is commemorating the 20th anniversary of Hurricane Katrina, reflecting on the resilience of its workforce and the restoration of operations post-storm [1][2][3] Group 1: Employee Resilience and Community - Employee testimonials and multimedia content are being shared to highlight the workforce's response to Hurricane Katrina, emphasizing the values that define the company [2] - Nearly 500 employees volunteered as "storm riders," protecting equipment and infrastructure during the hurricane, showcasing the commitment and teamwork of the workforce [4][5] - The sense of community that emerged post-Katrina is underscored by personal stories from employees, including Marcus Richardson Sr., who reflects on the strength and unity of the shipbuilders [5][7] Group 2: Operational Impact and Recovery - The hurricane tested the shipyard's operations but also revealed the strength and commitment of the workforce to build ships for the U.S. military [3] - Following the storm, the company provided essential support to employees, including food, water, and temporary housing, while continuing to pay them during the recovery [3] - Significant investments have been made in infrastructure and facilities since the hurricane, enhancing product flow, process efficiency, and product quality in the 35 ships delivered since 2005 [7]

Company Overview - Huntington Ingalls Industries Inc. (HII) has a subsidiary, Fleet Support Group LLC, which secured a contract for global engineering and technical support for the overhaul and repair of equipment related to west coast aircraft carriers and surface ships [1][2] - The contract is valued at $16.8 million and is expected to be completed by July 2026, with work executed in San Diego, CA; Bremerton, WA; and Yokosuka, Japan [2] Industry Position - HII is recognized as a premier supplier of naval ships, playing a critical role in the U.S. naval defense sector, which is vital for national security [3][4] - The company has designed and built over 31 aircraft carriers for the U.S. Navy since 1933, including all 10 Nimitz-class carriers currently in service, and is now constructing the next generation of Gerald R. Ford-class carriers [4][5] Growth Potential - Increasing geopolitical tensions and territorial disputes are driving nations to enhance their naval capabilities, leading to increased spending on naval warships [6] - The global naval vessels and surface combatant market is projected to grow at a compound annual growth rate of 5.6% from 2023 to 2030, which is expected to benefit HII as the largest military shipbuilder in the U.S. [7] Competitive Landscape - Other defense companies that may benefit from the expanding shipbuilding market include General Dynamics Corporation (GD), BAE Systems (BAESY), and Lockheed Martin (LMT), each with significant growth rates and market positions [8][9][10] Stock Performance - HII shares have increased by 55.3% over the past six months, outperforming the industry average rise of 18.9% [12]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1][2] Zacks Style Scores - Zacks Style Scores are indicators that help investors select stocks likely to outperform the market in the next 30 days, rated from A to F based on value, growth, and momentum [2][3] - The Value Score focuses on identifying undervalued stocks using ratios like P/E, PEG, and Price/Sales [3] - The Growth Score evaluates stocks based on projected and historical earnings, sales, and cash flow to identify sustainable growth opportunities [4] - The Momentum Score assesses stocks based on price trends and earnings estimate changes to identify favorable buying opportunities [5] - The VGM Score combines all three Style Scores to highlight stocks with attractive value, growth forecasts, and promising momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +23.75% since 1988, significantly outperforming the S&P 500 [7][8] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [10] Stock Analysis: Huntington Ingalls Industries (HII) - Huntington Ingalls Industries, based in Newport News, VA, specializes in designing and maintaining nuclear and non-nuclear ships for the U.S. Navy and Coast Guard [12] - HII holds a Zacks Rank of 3 (Hold) and a VGM Score of B, indicating solid performance potential [12] - The company has a Value Style Score of B, supported by a forward P/E ratio of 18.13, making it attractive for value investors [13] - Recent upward revisions in earnings estimates by eight analysts have increased the Zacks Consensus Estimate for fiscal 2025 by $0.39 to $14.70 per share, with an average earnings surprise of +3.2% [13]

Core Insights - HII's Mission Technologies division has been awarded a multiple award contract to enhance U.S. Navy fleet readiness through training products and services [1][2] Group 1: Contract Details - The contract is an indefinite-delivery, indefinite-quantity (IDIQ) type with a ceiling of $267 million, allowing HII to compete for task orders related to naval education and training [2] - The contract will support the Naval Education and Training Professional Development Center, focusing on professional growth and readiness for U.S. Navy enlisted personnel [2] Group 2: Training and Development - The initiative aims to empower sailors with essential technical skills for high-level performance, facilitating career advancement and lifelong learning [3] - It will enhance education, training, career development, and personnel advancement for the Navy's force development enterprise, including curriculum development and learning management systems [3] - Training opportunities will be provided through on-demand web-based training, addressing the need for adaptability in a network-centric warfare environment [3] Group 3: Company Overview - HII is a global defense provider, recognized as the largest military shipbuilder in the U.S., with a history of over 135 years in advancing national security [5][6] - The company offers a range of capabilities from ships to unmanned systems, cyber, ISR, AI/ML, and synthetic training [6] - HII employs a workforce of 44,000 and is headquartered in Virginia [6]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Huntington Ingalls Industries (HII) as a strong value stock based on various financial metrics [2][8]. Company Summary - Huntington Ingalls Industries (HII) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - HII's current P/E ratio is 17.86, significantly lower than the industry average of 27.64, suggesting it may be undervalued [4]. - The stock's Forward P/E has fluctuated between 10.03 and 17.86 over the past 12 months, with a median of 14.20 [4]. - HII's PEG ratio stands at 1.58, compared to the industry average of 2.02, indicating favorable growth expectations relative to its valuation [5]. - The P/B ratio for HII is 2.29, which is lower than the industry's average P/B of 6.17, further supporting its undervaluation [6]. - HII's P/S ratio is 0.92, significantly below the industry average of 2.23, reinforcing the notion that the stock is undervalued [7]. - Overall, HII's financial metrics suggest it is likely undervalued, making it an attractive option for value investors [8].

Core Insights - Huntington Ingalls Industries (HII) reported strong earnings results for Q2 2025, with GAAP revenue of $3.08 billion, exceeding analyst estimates, and GAAP earnings per share of $3.86, beating forecasts by 17.7% [1][5][11] - Despite the revenue outperformance, operating and segment income decreased year-over-year due to cost and margin pressures [1][5][12] - The company reaffirmed its full-year outlook, indicating confidence in future performance [1][11] Financial Performance - GAAP revenue increased by 3.4% year-over-year from $2.98 billion in Q2 2024 to $3.08 billion in Q2 2025 [2] - GAAP earnings per share decreased by 11.9% from $4.38 in Q2 2024 to $3.86 in Q2 2025 [2] - Operating income fell by 13.8% year-over-year to $163 million, while segment operating income dropped by 15.3% to $172 million [2] Business Segments - Ingalls Shipbuilding saw a 1.7% revenue increase, but segment operating margin decreased to 7.5% from 7.9% [6] - Newport News Shipbuilding experienced the highest revenue growth, but segment operating income declined significantly due to delays and performance issues [7] - The Mission Technologies division reported 3.4% revenue growth, with slight margin decline attributed to technology development costs [8] Contract and Backlog - New contract awards reached $11.9 billion, increasing the total backlog to a record $56.9 billion as of June 30, 2025 [9] - Major new orders were secured for submarine and destroyer programs, indicating strong future work visibility [9] Cash Flow and Dividends - Free cash flow turned positive at $730 million (non-GAAP), a significant improvement from a negative $99 million in the previous year [2][10] - The quarterly dividend increased by 3.8% to $1.35 per share from $1.30 in Q2 FY2024 [10] Future Guidance - For fiscal 2025, management expects Shipbuilding revenue between $8.9 billion and $9.1 billion, with non-GAAP operating margins of 5.5% to 6.5% [11] - The technology segment is projected to generate revenue of $2.9 billion to $3.1 billion, with operating margins of 4.0% to 4.5% [11] - Free cash flow guidance was raised to $500 million–$600 million, reflecting improved operational performance [11]

Core Insights - Huntington Ingalls Industries, Inc. (HII) reported second-quarter 2025 earnings of $3.86 per share, a decline of 11.9% from $4.38 in the prior-year quarter, but exceeded the Zacks Consensus Estimate of $3.23 by 19.5% [1] Revenue Performance - Total revenues for the quarter reached $3.08 billion, surpassing the Zacks Consensus Estimate of $2.92 billion by 5.2% and showing a year-over-year increase of 3.5% from $2.98 billion, driven by higher sales volume across all major business segments [2][9] Operational Performance - Segmental operating income was reported at $172 million, down from $203 million in the second quarter of 2024, with a segmental operating margin contraction of 120 basis points to 5.6%, primarily due to poor performance across all business segments [3] Order Backlog - HII received orders worth $11.9 billion in the second quarter of 2025, resulting in a total backlog of $56.9 billion as of June 30, 2025, compared to $48 billion as of March 31, 2024 [4] Segmental Performance - Newport News Shipbuilding: Revenues totaled $1.60 billion, up 4.4% year over year, but operating income decreased by 26.1% to $82 million due to poor performance in the Virginia-class submarine program and aircraft carrier construction [5] - Ingalls Shipbuilding: Revenues reached $724 million, a 1.7% increase year over year, with operating earnings down 3.6% to $54 million due to lower performance and contract incentives from amphibious assault ships [6] - Mission Technologies: Revenues were $791 million, up 3.4% year over year, driven by higher volumes from C5ISR and training solutions [6] Financial Update - Cash and cash equivalents as of June 30, 2025, totaled $343 million, significantly down from $831 million as of December 31, 2024 [8] - Long-term debt stood at $2.70 billion, consistent with the level at the end of 2024 [10] - Free cash flow was reported at $268 million, a significant improvement from a free cash outflow of $373 million in the prior-year period [10] 2025 Guidance - HII reaffirmed its 2025 guidance, expecting shipbuilding revenues in the range of $8.9-$9.1 billion and Mission Technologies revenues between $2.9-$3.1 billion, with an updated free cash flow projection of $500-$600 million [11]

Core Viewpoint - The article compares Huntington Ingalls (HII) and RTX (RTX) to determine which stock is a better undervalued investment option in the Aerospace - Defense sector [1] Group 1: Zacks Rank and Valuation Metrics - HII has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision trend compared to RTX, which has a Zacks Rank of 3 (Hold) [3] - Value investors utilize various valuation metrics to assess whether a company is undervalued, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] Group 2: Specific Valuation Comparisons - HII's forward P/E ratio is 17.92, while RTX's forward P/E ratio is significantly higher at 26.57 [5] - HII has a PEG ratio of 1.59, indicating a more favorable valuation in relation to its expected earnings growth, compared to RTX's PEG ratio of 2.91 [5] - HII's P/B ratio stands at 2.13, while RTX has a higher P/B ratio of 3.3, further supporting HII's position as the more attractive value option [6] Group 3: Overall Value Grades - Based on the discussed metrics, HII holds a Value grade of B, while RTX has a Value grade of C, reinforcing HII's superior valuation profile [6]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2025 [Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) The company reported Q2 2025 revenues of $3.08 billion and net earnings of $152 million, reflecting a slight revenue increase but a decrease in net earnings year-over-year Consolidated Statements of Operations Highlights (Unaudited) | (in millions, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Sales and service revenues** | $3,082 | $2,977 | $5,816 | $5,782 | | **Operating income** | $163 | $189 | $324 | $343 | | **Net earnings** | $152 | $173 | $301 | $326 | | **Diluted earnings per share** | $3.86 | $4.38 | $7.66 | $8.25 | [Condensed Consolidated Statements of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Total assets slightly decreased to $12.10 billion as of June 30, 2025, marked by a significant drop in cash and an increase in stockholders' equity Condensed Consolidated Statements of Financial Position Highlights (Unaudited) | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $2,973 | $3,228 | | **Total assets** | $12,098 | $12,141 | | **Total current liabilities** | $2,750 | $2,991 | | **Total liabilities** | $7,216 | $7,475 | | **Total stockholders' equity** | $4,882 | $4,666 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations improved significantly to $428 million for the first half of 2025, though overall cash decreased due to investing and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | ($ in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $428 | $(211) | | **Net cash used in investing activities** | $(291) | $(162) | | **Net cash used in financing activities** | $(625) | $(46) | | **Change in cash and cash equivalents** | $(488) | $(419) | | **Cash and cash equivalents, end of period** | $343 | $11 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, segment performance, a recent acquisition, backlog status, and significant legal proceedings - The company is organized into three reportable segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Mission Technologies, making it **America's largest shipbuilder**[14](index=14&type=chunk) - In January 2025, the company acquired W International for **$133 million in cash** to expand its shipbuilding capacity, resulting in **$33 million of tax-deductible goodwill**[26](index=26&type=chunk) - As of June 30, 2025, the company had **$56.9 billion of remaining performance obligations (backlog)**, with approximately 35% expected to be recognized as revenue through 2026[34](index=34&type=chunk) - The company is involved in a class action antitrust lawsuit alleging a "gentlemen's agreement" not to recruit naval engineers from other defendants, which was remanded for further proceedings[53](index=53&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 4% YoY revenue increase to $3.1 billion in Q2 2025, offset by a 14% decrease in operating income due to segment performance issues - The federal government is operating under a full-year Continuing Resolution for fiscal year 2025, creating uncertainty, while the proposed FY2026 budget recommends a **$1.01 trillion National Defense budget**[78](index=78&type=chunk)[79](index=79&type=chunk) - **Total backlog increased to $56.9 billion** as of June 30, 2025, from $48.7 billion at year-end 2024, driven by **$14.0 billion in new contract awards** in the first half of 2025[149](index=149&type=chunk)[151](index=151&type=chunk) - **Free cash flow for the first six months of 2025 was $268 million**, a **$641 million improvement** from the negative $373 million in the same period of 2024[160](index=160&type=chunk) Consolidated Operating Results Summary | ($ in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Sales and service revenues** | $3,082 | $2,977 | 4% | | **Operating income** | $163 | $189 | (14)% | | **Net earnings** | $152 | $173 | (12)% | [Ingalls Segment](index=29&type=section&id=Ingalls%20Segment) The Ingalls segment reported a 2% revenue increase to $724 million in Q2 2025, with a slight decrease in operating income and margin Ingalls Segment Performance (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Sales and service revenues** | $724 | $712 | 2% | | **Segment operating income** | $54 | $56 | (4)% | | **Operating Margin** | 7.5% | 7.9% | - | [Newport News Segment](index=29&type=section&id=Newport%20News%20Segment) Newport News revenue grew 4% to $1.60 billion in Q2 2025, but operating income fell 26% due to performance challenges on key programs - The Newport News segment continues to face **performance challenges** in the construction of aircraft carriers and the Virginia class (SSN 774) submarine program[123](index=123&type=chunk) Newport News Segment Performance (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Sales and service revenues** | $1,603 | $1,535 | 4% | | **Segment operating income** | $82 | $111 | (26)% | | **Operating Margin** | 5.1% | 7.2% | - | [Mission Technologies Segment](index=31&type=section&id=Mission%20Technologies%20Segment) The Mission Technologies segment revenue rose 3% to $791 million in Q2 2025, while operating income remained flat at $36 million Mission Technologies Segment Performance (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Sales and service revenues** | $791 | $765 | 3% | | **Segment operating income** | $36 | $36 | 0% | | **Operating Margin** | 4.6% | 4.7% | - | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from inflation, while interest rate risk is currently mitigated by no outstanding floating-rate debt - The company had **no outstanding balances** on its $1.7 billion revolving credit facility or its $1.7 billion commercial paper program as of June 30, 2025, mitigating short-term floating interest rate risk[172](index=172&type=chunk) - **Persistent cost inflation** for raw materials, components, and supplies is a key risk that may not be fully covered by mitigation measures[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - The CEO and CFO concluded that as of June 30, 2025, the company's **disclosure controls and procedures were effective**[174](index=174&type=chunk) - **No changes occurred** in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[175](index=175&type=chunk) [PART II – OTHER INFORMATION](index=38&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to legal proceeding disclosures in Part I, Item 1, noting no other material matters and a $1 million disclosure threshold for environmental cases - Information on legal proceedings is incorporated by reference from the notes to the financial statements in Part I, Item 1[178](index=178&type=chunk) - The company's disclosure threshold for environmental legal proceedings with governmental authorities is potential monetary sanctions **over $1 million**[179](index=179&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive risk factors detailed in the company's 2024 Annual Report on Form 10-K - The report refers to the risk factors detailed in the **2024 Annual Report on Form 10-K** for a comprehensive understanding of potential risks[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock in Q2 2025, with approximately $1.35 billion remaining under its authorized repurchase program - The board of directors authorized an increase in the stock repurchase program to **$3.8 billion** and extended its term to December 31, 2028[28](index=28&type=chunk)[182](index=182&type=chunk) Share Repurchase Activity (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :--- | :--- | :--- | :--- | | April 2025 | — | $— | $1,352.3 | | May 2025 | — | $— | $1,352.3 | | June 2025 | — | $— | $1,352.3 | | **Total** | **—** | **$—** | **$1,352.3** | [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No company directors or officers adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025 - **No directors or officers** adopted or terminated a Rule 10b5-1 trading plan during the quarter[185](index=185&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files - Key exhibits filed include **CEO/CFO certifications** under Sarbanes-Oxley Sections 302 and 906, and financial statements formatted in XBRL[186](index=186&type=chunk)

Core Insights - Huntington Ingalls (HII) reported revenue of $3.08 billion for the quarter ended June 2025, reflecting a 3.5% increase year-over-year and surpassing the Zacks Consensus Estimate of $2.93 billion by 5.22% [1] - The company's EPS was $3.86, down from $4.38 in the same quarter last year, but exceeded the consensus EPS estimate of $3.23 by 19.5% [1] Financial Performance Metrics - Sales and Service Revenues for Mission Technologies reached $791 million, exceeding the average estimate of $743.79 million by analysts, marking a year-over-year increase of 3.4% [4] - Intersegment eliminations reported revenues of $-36 million, slightly above the average estimate of $-35.9 million, with a year-over-year change of 2.9% [4] - Newport News generated $1.6 billion in revenues, surpassing the estimated $1.53 billion and showing a 4.4% increase compared to the previous year [4] - Ingalls reported $724 million in revenues, exceeding the average estimate of $693.91 million, reflecting a year-over-year change of 1.7% [4] Segment Operating Income - Ingalls segment operating income was $54 million, above the average estimate of $46.5 million [4] - Mission Technologies segment operating income reached $36 million, exceeding the estimated $27.66 million [4] - Newport News segment operating income was reported at $82 million, surpassing the average estimate of $79.32 million [4] Stock Performance - Shares of Huntington Ingalls have returned +3.4% over the past month, outperforming the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]