NYSE:HII
HUNTINGTON INGALLS INDUSTRIES, INC.
A leading U.S. defense contractor delivering critical naval shipbuilding solutions and engineering services to the Department of Defense and allied partners.
Key Metrics
Investment Thesis
Bull Case
HII offers a stable investment profile backed by a robust backlog of naval shipbuilding contracts that are largely guaranteed by the U.S. government. The company's focus on high-value, complex platforms like aircraft carriers ensures consistent demand in an era of increasing global geopolitical tensions and modernization requirements. Consistent profitability and strong cash generation provide room for dividends and share buybacks, appealing to income-focused institutional investors.
Bear Case
The stock faces valuation pressure due to its classification as a low-growth defense contractor with limited exposure to high-margin commercial markets. Geopolitical instability or domestic political shifts could lead to unexpected reductions in defense budgets, directly impacting future revenue growth and contract renewals. The company's heavy asset base and significant debt levels may constrain financial flexibility if interest rates remain elevated or if large capital projects face cost overruns.
About HUNTINGTON INGALLS INDUSTRIES, INC.
Huntington Ingalls Industries (NYSE:HII) is a premier shipbuilder specializing in designing and constructing advanced naval vessels, aircraft carriers, amphibious assault ships, and littoral combat ships for the United States Navy and Marine Corps. The company also provides engineering services, maintenance, and repair support to its existing fleet of assets across defense and commercial maritime sectors.
Analysis
Management Discussion
The company reported a net profit of $605 million in 2025, reflecting resilience despite fluctuations in prior years such as the dip to $550 million in 2024. Strong operating cash flow of $1.20 billion demonstrates the quality of earnings and the ability to fund capital expenditures of $402 million while managing debt repayments of $500 million. The slight increase in revenue from $11.54 billion in 2024 to $12.48 billion in 2025 suggests successful contract wins or progress on major multi-year naval ship deliveries.
Industry Overview
The global naval shipbuilding industry is characterized by long project cycles, high regulatory standards, and a concentration of contracts among a few major players in key maritime nations. Demand is driven by the need to modernize aging fleets and expand capacity to counter growing regional security threats from authoritarian regimes. In the United States, the defense sector remains one of the largest industrial sectors, with HII holding a dominant position in the construction of surface combatants.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $10.68B | $11.45B | $11.54B | $12.48B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $10.68B | $11.45B | $11.54B | $12.48B |
| Operating Expenses | $10.11B | $10.67B | $11.00B | $11.83B |
| Operating Income | $565.0M | $781.0M | $535.0M | $657.0M |
| R&D | $40.0M | $35.0M | $27.0M | $26.0M |
| G&A | $924.0M | $1.02B | $973.0M | $977.0M |
| Stock-Based Comp | $36.0M | $34.0M | $23.0M | $54.0M |
| D&A | $358.0M | $347.0M | $326.0M | $329.0M |
| Depreciation | $218.0M | $219.0M | $217.0M | $225.0M |
| Amortization | $140.0M | $128.0M | $109.0M | $104.0M |
| Other OpEx | $9.15B | $9.62B | $10.00B | $10.82B |
| Non-Operating Income | $154.0M | $72.0M | $108.0M | $120.0M |
| Interest Expense | $102.0M | $95.0M | $95.0M | $105.0M |
| Pre-Tax Income | $719.0M | $853.0M | $643.0M | $777.0M |
| Income Tax | $140.0M | $172.0M | $93.0M | $172.0M |
| Continuing Ops | $579.0M | $681.0M | $550.0M | $605.0M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $579.0M | $681.0M | $550.0M | $605.0M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $579.0M | $681.0M | $550.0M | $605.0M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $2.75B | $2.88B | $3.23B | $3.45B |
| Accounts Receivable | $636.0M | $461.0M | $212.0M | $339.0M |
| Prepaid Expenses | $50.0M | $83.0M | $90.0M | $77.0M |
| Other Current Assets | $2.06B | $2.34B | $2.93B | $3.04B |
| Long-Term Assets | $8.11B | $8.34B | $8.91B | $9.30B |
| PP&E (Net) | $3.20B | $3.30B | $3.45B | $3.73B |
| Goodwill | $2.62B | $2.62B | $2.62B | $2.65B |
| Operating Leases | $282.0M | $262.0M | $239.0M | $267.0M |
| Other LT Assets | $2.01B | $2.16B | $2.61B | $2.65B |
| Total Assets | $10.86B | $11.21B | $12.14B | $12.75B |
| Current Liabilities | $2.90B | $3.03B | $2.99B | $3.04B |
| Accounts Payable | $642.0M | $554.0M | $598.0M | $556.0M |
| Current Debt | $399.0M | $231.0M | — | — |
| Current Leases | — | $51.0M | $51.0M | $58.0M |
| Deferred Revenue | $766.0M | $1.06B | $774.0M | $1.22B |
| Other Current Liab | $1.09B | $1.13B | $1.57B | $1.21B |
| Long-Term Liabilities | $4.47B | $4.09B | $4.48B | $4.63B |
| Long-Term Debt | $2.51B | $2.21B | — | — |
| LT Operating Leases | $246.0M | $228.0M | $205.0M | $223.0M |
| Other LT Liab | $1.72B | $1.65B | $4.28B | $4.41B |
| Total Liabilities | $7.37B | $7.12B | $7.47B | $7.68B |
| Shareholders' Equity | $3.49B | $4.09B | $4.67B | $5.07B |
| Retained Earnings | $4.28B | $4.75B | $5.10B | $5.49B |
| AOCI | $-599.0M | $-422.0M | $-28.0M | $-53.0M |
| Treasury Stock | $2.21B | $2.29B | $2.45B | $2.45B |
| Total L&E | $10.86B | $11.21B | $12.14B | $12.75B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $579.0M | $681.0M | $550.0M | $605.0M |
| Non-Cash Adjustments | $180.0M | $-371.0M | $325.0M | $17.0M |
| Working Capital Changes | $7.0M | $660.0M | $-482.0M | $574.0M |
| Cash from Operations | $766.0M | $970.0M | $393.0M | $1.20B |
| Capital Expenditures | $284.0M | $292.0M | $367.0M | $402.0M |
| Cash from Investing | $-268.0M | $-236.0M | $-348.0M | $-521.0M |
| Debt Issuances | — | — | $1.00B | — |
| Debt Repayments | $400.0M | $480.0M | $229.0M | $500.0M |
| Share Buybacks | $52.0M | $75.0M | $162.0M | — |
| Dividends Paid | $192.0M | $200.0M | $206.0M | $213.0M |
| Cash from Financing | $-658.0M | $-771.0M | $356.0M | $-732.0M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $-160.0M | $-37.0M | $401.0M | $-57.0M |
| Beginning Cash | $627.0M | $467.0M | $430.0M | $831.0M |
| Ending Cash | $467.0M | $430.0M | $831.0M | $774.0M |
Frequently Asked Questions
How does HUNTINGTON INGALLS INDUSTRIES, INC. make money?
Revenue is primarily driven by the design and construction of new naval ships, including aircraft carriers and large amphibious assault ships, which typically have long production cycles and high contract values. A second significant segment includes the maintenance, repair, and overhaul (MRO) of existing Navy vessels, providing steady cash flow alongside new build contracts. The company also generates revenue through engineering services, technical support, and logistics solutions for maritime platforms.
What are the main risks for HII?
Heavy reliance on U.S. government defense spending makes the company vulnerable to budget cuts, sequestration events, or shifts in national security priorities. Long production cycles for naval ships can lead to timing mismatches between revenue recognition and cash outflows, impacting liquidity during transition periods. Potential supply chain disruptions or increases in raw material costs could erode margins on fixed-price contracts if escalation clauses are insufficient.
What is HII's competitive advantage?
HII possesses deep government relationships and a specialized workforce with over 25 years of experience building complex naval assets, creating high barriers to entry. The company benefits from long-term, fixed-price contracts that often include inflation escalators, providing predictable revenue streams and favorable margin profiles. Its integrated supply chain and extensive facility footprint in Mississippi allow for efficient execution of massive shipbuilding projects.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.