Australia markets open in 6 hours 47 minutes

Huntington Ingalls (HII) Q1 Earnings Miss Estimates, Up Y/Y

Zacks Equity Research

Huntington Ingalls Industries, Inc.’s HII first-quarter 2020 earnings of $4.23 per share missed the Zacks Consensus Estimate of $4.47 by 5.4%. However, the bottom line surged 48.4% from $2.85 reported in the prior-year quarter.

Total Revenues

Total revenues came in at $2.26 billion, exceeding the Zacks Consensus Estimate of $2.11 billion by 7.1%. The top line also rose 8.8% from $2.08 billion in the year-ago quarter. The increase was driven primarily by higher volumes at the Newport News and Ingalls shipbuilding divisions as well as growth in the Technical Solutions division.

Operational Performance

Huntington Ingalls’ total operating income grew 33.5% year over year to $215 million, while operating margin was 9.5% compared with 7.7% in the first quarter of 2019. The increases in both metrics mainly resulted from a more favorable operating FAS/CAS adjustment and higher risk retirement at both Newport News and Ingalls shipbuilding divisions.

Huntington Ingalls received orders worth $900 million during the first quarter. As a result, the company’s total backlog reached $45.2 billion as of Mar 31.

Segmental Performance

Newport News Shipbuilding: Revenues totaled $1,341 million at this segment, up 4.8% year over year, backed by higher revenues in submarine construction.

Meanwhile, operating income improved 17.3% to $95 million, while operating margin expanded 75 bps to 7.1%. These increases were primarily driven by higher risk retirement on the VCS program and the RCOH of USS George Washington (CVN 73).

Ingalls Shipbuilding: Revenues at this segment increased 7.7% to $629 million on account of higher revenues from the San Antonio-class LPD program and the Arleigh Burke-class DDG program.

Also, operating income surged 47.8% to $68 million, while operating margin expanded 293 bps to 10.8%. These increases were primarily driven by higher risk retirement on the LPD and DDG programs.

Technical Solutions: Revenues at this segment summed $317 million, up 32.1% year over year. The upside was primarily led by higher mission-driven innovative solutions (MDIS) revenues attributable to the acquisition of Fulcrum IT Services in 2019 and higher volumes on other MDIS services. The segment incurred an operating loss of $7 million, while operating margin contracted 304 bps during the quarter.

Huntington Ingalls Industries Inc Price, Consensus and EPS Surprise

Huntington Ingalls Industries Inc Price, Consensus and EPS Surprise

Huntington Ingalls Industries Inc price-consensus-eps-surprise-chart | Huntington Ingalls Industries Inc Quote

Financial Update

Cash and cash equivalents as of Mar 31, 2020, were $28 million, significantly down from $75 million as of Dec 31, 2019.

Long-term debt, as of Mar 31, 2020, was $1,667 million compared with the 2019-end level of $1,286 million.

Cash from operating activities, at the end of the first quarter of 2020, grossed $68 million compared with $11 million at the end of first-quarter 2019.

Zacks Rank

Huntington Ingalls carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Release

Lockheed Martin Corp. LMT, a Zacks Rank #3 company, reported first-quarter 2020 earnings of $6.08 per share, which surpassed the Zacks Consensus Estimate of $5.76 by 5.5%. The bottom line also improved 1.5% from the year-ago quarter’s $5.99.

General Dynamics Corporation GD, a Zacks Rank #3 company, reported first-quarter 2020 earnings from continuing operations of $2.43 per share, which missed the Zacks Consensus Estimate of $2.46 by 1.2%. Moreover, earnings declined 5.1% from $2.56 in the year-ago quarter.

Teledyne Technologies Inc. TDY, a Zacks Rank #3 company, reported first-quarter 2020 earnings of $2.28 per share, which surpassed the Zacks Consensus Estimate of $2.10 by 8.6%. The bottom line also improved 12.9% from the year-ago quarter’s $2.02.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
General Dynamics Corporation (GD) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report
 
Huntington Ingalls Industries Inc (HII) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.