While the S&P 500 is up 11.6% since November 2025, Huntington Ingalls (currently trading at $329.35 per share) has lagged behind, posting a return of 6.3%. This may have investors wondering how to approach the situation.
Is there a buying opportunity in Huntington Ingalls, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Huntington Ingalls Will Underperform?
We're sitting this one out for now. Here are three reasons why HII doesn't excite us and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Huntington Ingalls grew its sales at a mediocre 6.5% compounded annual growth rate. This fell short of our benchmark for the industrials sector.
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Huntington Ingalls’s revenue to rise by 2.4%, a slight deceleration versus its 6.5% annualized growth for the past five years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.
3. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Huntington Ingalls, its EPS declined by 1.5% annually over the last five years while its revenue grew by 6.5%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Huntington Ingalls falls short of our quality standards. With its shares lagging the market recently, the stock trades at 18.1× forward P/E (or $329.35 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. Let us point you toward the Amazon and PayPal of Latin America.
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