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Huntington Ingalls Industries, Inc. (HII), headquartered in Newport News, Virginia, designs, builds, overhauls, and repairs military ships. Valued at $6.6 billion by market cap, the company offers non-nuclear and nuclear-powered vessels for the U.S. Navy and Coast Guard, and also provides after-market services for military ships worldwide.
Shares of this largest military shipbuilding company have considerably underperformed the broader market over the past year. HII has declined 41.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 17.6%. In 2025, HII stock is down 10.7%, compared to SPX’s 1.7% rise on a YTD basis.
Narrowing the focus, HII’s underperformance is also apparent compared to SPDR S&P Aerospace & Defense ETF (XAR). The exchange-traded fund has gained about 20.1% over the past year. Moreover, the ETF’s 2.5% dip on a YTD basis outshines the stock’s double-digit losses over the same time frame.
HII's underperformance stems from a weak top line due to lower volumes across segments, labor issues, supply chain disruptions, and rising costs. Additionally, cautious military spending adds to worker retention challenges, driving expenses higher, while delays in a key submarine contract with the Navy further impacted profitability and cash flow.
On Feb. 6, HII shares closed down more than 18% after reporting its Q4 results. Its EPS of $3.15 missed Wall Street expectations of $3.28. The company’s revenue was $3 billion, falling short of Wall Street forecasts of $3.03 billion.
For fiscal 2025, ending in December, analysts expect HII’s EPS to grow marginally to $13.99 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimates in two of the last four quarters while missing the forecast on two other occasions.
Among the 10 analysts covering HII stock, the consensus is a “Hold.” That’s based on one “Strong Buy” rating, seven “Holds,” one “Moderate Sell,” and one “Strong Sell.”
The configuration has been consistent over the past three months.
On Feb. 17, Citigroup Inc. (C) kept a “Buy” rating on HII and lowered the price target to $235, implying a potential upside of 39.2% from current levels.
The mean price target of $198.45 represents a 17.6% premium to HII’s current price levels. The Street-high price target of $275 suggests an ambitious upside potential of 62.9%.
