What Happened?
Shares of aerospace and defense company Huntington Ingalls (NYSE: HII) jumped 2.6% in the morning session after its Ingalls Shipbuilding division was selected by the U.S. Navy to design and build a new class of small surface combatant (SSC) ships.
The project involved using the successful design of the Legend-class national security cutter, a vessel previously built by the company. This indicated confidence in the company's existing and proven platforms. HII's Ingalls Shipbuilding division planned to integrate the new construction into its current production lines, building the SSC ships alongside its ongoing destroyer and amphibious ship projects. The new contract represented a significant win for the company, securing a key project with its largest customer.
After the initial pop the shares cooled down to $331.87, up 2.9% from previous close.
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What Is The Market Telling Us
Huntington Ingalls’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 17% on the news that the company reported a disappointing fourth quarter, with EPS missing significantly and revenue falling short of Wall Street's estimates. The weak top line was driven by lower volume in all segments. Overall, this was a challenging quarter.
Huntington Ingalls is up 76.9% since the beginning of the year, and at $331.87 per share, has set a new 52-week high. Investors who bought $1,000 worth of Huntington Ingalls’s shares 5 years ago would now be looking at an investment worth $2,008.
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