Huntington Ingalls Industries (HII)
EV/EBIT = 16.5x
ROE = 15.63%
Debt/Equity = 72%
FCF Yield = 6%
Dividend Yield = 2%
Market Capitalization = $10.17 billion
Huntington Ingalls Industries, Inc. (HII), a US defense company, constructs powerful naval ships and deploys cutting-edge technologies for the U.S. military. Its operations are segmented into three key divisions: Ingalls Shipbuilding, Newport News Shipbuilding, and Mission Technologies.
Huntington Ingalls Industries derives its revenue and profits from the U.S. military, engaging in long-term shipbuilding contracts that provide a stable and predictable income stream. The company's primary focus revolves around constructing nuclear submarines and aircraft carriers, and it holds the exclusive distinction of being the sole manufacturer of amphibious assault ships for the U.S. Navy.
Huntington Ingalls Industries has a substantial backlog of business, currently at an impressive $47.1 billion. Within this backlog, $22 billion is fully funded, providing a solid foundation for current projects, while $24 billion is unfunded.
Beyond the existing book of business, there is a potential for further expansion.
The U.S. faces escalating military threats, particularly from China, creating a need for the U.S. to bolster its naval capabilities. As these threats grow, the demand for Huntington's business should increase, aligning with the U.S. government's commitment to expanding the size of the naval fleet.
The U.S. Navy has outlined an ambitious 30-year plan aimed at significant expansion and modernization of the naval fleet. By 2053, there are expectations to amplify the battle force ship inventory. The goal is to increase it from the current 293 ships to a force ranging from a conservative estimate of 319 to an upper-end projection of 367. In parallel with this expansion, there is a simultaneous effort to upgrade the current fleet.
Huntington is poised to benefit significantly from this naval expansion.