MCLEAN, Va. - HII (NYSE: HII), a global defense and technology company, has been awarded a $197 million contract to enhance U.S. Army combat vehicles. The contract, part of the DoD Information Analysis Center's multiple-award contract vehicle, tasks HII's Mission Technologies division with advancing the Ground Vehicle Systems Center's (GVSC) ground combat systems over the next five years.
The company will focus on research and development to improve vehicle power, mobility, and the service lifecycle of the Army's fleet, including manned, unmanned, and robotic vehicles. This initiative is aimed at bolstering soldier safety and mission success on the battlefield.
Grant Hagen, head of Mission Technologies' Warfare Systems group at HII, expressed enthusiasm for the collaboration, emphasizing the company's commitment to accelerating advanced technology for the benefit of the warfighter. The work will be primarily conducted in Warren, Michigan, building on HII's two-decade-long partnership with GVSC.
The DoDIAC program, sponsored by the Defense Technical Information Center (DTIC), supports the DoD and federal government with technical data management and research. It has been a cornerstone for driving innovation and technological developments within the DoD since 1946.
HII, known for being the nation's largest military shipbuilder, extends its capabilities to include unmanned systems, cyber, ISR, AI/ML, and synthetic training. With a workforce of 44,000 and a legacy spanning over 135 years, HII continues to play a pivotal role in advancing U.S. national security.
This contract is expected to contribute to the DTIC repository and serve the broader science and technology community, in line with DoDIAC's goal of enhancing collaboration through scientific and technical information development.
The information regarding this contract is based on a press release statement. The views expressed in the material are those of the authors and do not necessarily reflect the views of the DoD.
In other recent news, Huntington Ingalls Industries (NYSE:HII) reported a decrease in third-quarter earnings for 2024, with earnings per share dropping to $2.56 from $3.70 in the same quarter of the previous year. HII's revenue also saw a 2.4% year-on-year decline to $2.7 billion. Despite these setbacks, the company announced a significant $9.6 billion contract award for amphibious warships, increasing its backlog to $49.4 billion. TD Cowen downgraded HII from Buy to Hold, citing persistent shipbuilding execution challenges that are expected to continue impacting the company's margin levels. The firm also significantly reduced the price target for HII to $180 from the previous $290.
In leadership transitions, Kari Wilkinson will take over as president of HII's Newport News Shipbuilding division starting January 1, 2025, succeeding Jennifer Boykin, who is retiring after 37 years with the company. Brian Blanchette, who has been with Ingalls since 1996, has been elected to succeed Wilkinson as executive vice president of HII and president of Ingalls Shipbuilding.
In response to operational challenges, HII revised its full-year guidance for shipbuilding revenue to $8.8 billion and updated its free cash flow expectations to range between zero and $100 million. The company is focusing on workforce training and supply chain improvements to address these performance challenges. In other recent developments, HII anticipates submarine contract agreements in late 2024, aiming for mid to long-term shipbuilding margins of 9-10%. The company also plans to consolidate Mission Technologies to enhance competitiveness and reduce costs.
InvestingPro Insights
The recent $197 million contract awarded to HII for enhancing U.S. Army combat vehicles comes at a crucial time for the company. According to InvestingPro data, HII's stock has experienced significant pressure, with a 22.86% decline in the past week and a 24.33% drop over the last three months. This new contract could potentially help stabilize the company's position in the market.
Despite the recent stock performance, HII maintains a solid financial foundation. The company boasts a P/E ratio of 11.59, which is relatively low compared to its peers in the defense sector. This suggests that the stock might be undervalued, especially considering the company's consistent profitability and dividend history.
An InvestingPro Tip highlights that HII has raised its dividend for 13 consecutive years, demonstrating a commitment to shareholder returns even in challenging times. This consistent dividend growth, coupled with a current dividend yield of 2.79%, may appeal to income-focused investors.
Another relevant InvestingPro Tip indicates that HII is trading at a low P/E ratio relative to its near-term earnings growth. This could be particularly significant given the new contract, which may contribute to future earnings potential.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for HII, providing a deeper understanding of the company's financial health and market position.
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