NEWPORT NEWS, Va. - Huntington Ingalls (NYSE:HII) Industries’ (NYSE:HII) Newport News Shipbuilding division announced the completion of the post-shakedown availability (PSA) work on the Virginia-class fast attack submarine USS Montana (SSN 794), which was redelivered to the U.S. Navy on Tuesday.
The PSA is a standard maintenance period for new ships, and for the USS Montana, it included enhancements to combat systems and electronics, in addition to general maintenance tasks. The submarine, which is the 21st of the Virginia-class and the 10th delivered by Newport News Shipbuilding, was commissioned on June 25, 2022, at Naval Station Norfolk.
Jason Ward, NNS vice president of Virginia-class submarine construction, stated, "Redelivering USS Montana back to the fleet reflects the tremendous teamwork and accomplishment by our shipbuilders and the crew." He emphasized the company's dedication to delivering superior submarines to the Navy, ensuring their readiness for defending national interests globally.
Huntington Ingalls Industries, described as the nation's largest military shipbuilder, has a workforce of 44,000 and a history extending beyond 135 years in advancing U.S. national security. The company’s portfolio includes not only shipbuilding but also unmanned systems, cyber, intelligence, surveillance, reconnaissance (ISR), artificial intelligence/machine learning (AI/ML), and synthetic training solutions.
This achievement underscores HII's ongoing role in providing critical capabilities for the U.S. Navy, with the USS Montana now equipped to rejoin the fleet for operational duties. The information reported is based on a press release statement issued by the company.
In other recent news, Huntington Ingalls Industries reported a decrease in third-quarter earnings for 2024, with earnings per share dropping to $2.56 from $3.70 in the previous year. The company's revenue also saw a 2.4% year-on-year decline to $2.7 billion. Despite these setbacks, Huntington Ingalls announced a significant $9.6 billion contract for amphibious warships, boosting its backlog to $49.4 billion.
The company has faced challenges, including unfavorable contracts, a workforce that lacks experience, and ongoing supply chain delays. In response, Huntington Ingalls has been exploring new contracting methods and implementing fresh hiring strategies. However, these initiatives have yet to yield significant results.
BofA Securities lowered its price target for Huntington Ingalls from $250 to $195, maintaining an Underperform rating due to these ongoing challenges. Similarly, TD Cowen downgraded the company from Buy to Hold, reducing its price target to $180 from $290 due to persistent shipbuilding execution challenges.
In leadership transitions, Kari Wilkinson will assume the role of president of Huntington Ingalls' Newport News Shipbuilding division from January 1, 2025. Additionally, the company secured a $197 million contract to enhance U.S. Army combat vehicles through its Mission Technologies division.
InvestingPro Insights
As Huntington Ingalls Industries (HII) continues to deliver critical naval assets like the USS Montana, investors might find value in examining the company's financial health and market performance. According to InvestingPro data, HII boasts a market capitalization of $7.98 billion, reflecting its significant position in the defense industry.
Despite recent achievements, HII's stock has faced headwinds, with a 21.78% price decline over the past three months. This downturn presents a potential opportunity for value investors, as the company is trading at a P/E ratio of 11.53, which is relatively low compared to its near-term earnings growth potential. This is highlighted by one of the InvestingPro Tips, suggesting that HII might be undervalued at current levels.
On the financial front, HII reported revenue of $11.71 billion in the last twelve months as of Q3 2023, with a modest growth of 5.58%. The company's profitability remains solid, with a gross profit of $1.62 billion and an operating income of $741 million over the same period. These figures underscore HII's ability to maintain profitable operations amidst challenging market conditions.
For income-focused investors, HII offers a dividend yield of 2.64% and has raised its dividend for 13 consecutive years, demonstrating a commitment to shareholder returns. This consistent dividend growth, coupled with the company's long-term contracts and essential role in national defense, may provide some stability to investor portfolios.
It's worth noting that InvestingPro offers additional insights, with 10 more tips available for HII, which could provide a more comprehensive view of the company's prospects and challenges. These tips, along with real-time metrics, can be valuable tools for investors looking to make informed decisions in the defense sector.
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