Overview Huntington Ingalls Industries (HII) is a U.S. defense shipbuilder and services firm with a capital‑intensive, cyclical revenue profile that has recently shifted from cash‑absorbing operations to materially positive operating cash generation — operating cash flow rose to $1.20B TTM. Strengths Among the company’s strengths is a clear improvement in cash generation: operating cash flow recov
Huntington Ingalls Industries (HII) is a U.S. defense shipbuilder and services firm with a capital‑intensive, cyclical revenue profile that has recently shifted from cash‑absorbing operations to materially positive operating cash generation — operating cash flow rose to $1.20B TTM.
Among the company’s strengths is a clear improvement in cash generation: operating cash flow recovered from −$766.0M in 2022 to $393.0M in 2024 and reached $1.20B in the 2025 TTM, while investing cash outflows were −$521.0M and financing flows were −$732.0M in the same period, reflecting active cash allocation decisions (Strategic Capital Allocation).
Reported net income has been consistently positive (most recent trailing net income $550.0M) with a stability metric (avg/stdev) of 9.91, indicating predictable earnings through the cycle (Earnings Quality Analysis).
Valuation metrics also sit toward the lower end of the company’s recent range, with a trailing P/E of 13.7x as of 2024-12-31 (Price-to-Earnings (PE) Ratio Trend).
Notable concerns include a sharp deterioration in revenue‑per‑share and top‑line scale: revenue per share fell to $54.04 in 2025 after peaking at $287.07 in 2023, with 1‑year revenue‑per‑share growth of −70.8% in 2025, and revenue remains volatile on a quarterly basis ($531.0M) (EPS Diluted & Revenue per Share, Revenue & Net Income).
Profitability and returns have also cooled from prior highs: ROE declined to 11.8% for the period ending 2024-12-31 from a peak of 36.6% in 2020, and diluted EPS fell by −19.2% year‑over‑year in 2024, signaling pressure on per‑share earnings and returns (Return on Equity (ROE), Revenue & EPS Growth).
Liquidity is an additional watch point: the current ratio is below 1.0 at 0.96.
Key fundamental metrics to monitor going forward are operating cash flow and free cash flow conversion (operating cash flow TTM $1.20B and investing cash flow TTM $−521.0M), revenue‑per‑share and its 1‑year growth (−70.8%), diluted EPS trends and year‑over‑year EPS growth (−19.2% most recently), gross and net margin normalization (gross margin 93.3% in 2025 and net margin 7.4% in 2024), and the current ratio and ROE (current ratio 0.96; ROE 11.8%) as indicators of liquidity and capital returns (Profit Margin Trends, Strategic Capital Allocation, Return on Equity (ROE), EPS Diluted & Revenue per Share, Revenue & Net Income, Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
HUNTINGTON INGALLS INDUSTRIES, INC.'s revenue history shows marked volatility over the period shown. Revenue reached multi‑billion peaks in 2020–2021 (e.g., $3.73B on 2021-03-31 and $3.70B on 2020-09-30) and again $2.82B on 2023-09-30, then declined to the hundreds of millions in 2025 (e.g., $184.0M on 2025-03-31 and $185.0M on 2025-09-30) before reporting $531.0M in the most recent quarter (2026-03-31). Those values indicate a significant downward shift from earlier multi‑billion quarters to lower scale revenues in 2025–2026.
Net income has remained positive across the recent quarters reported, showing relative consistency in the mid‑hundreds of millions at several points and mid‑hundreds recently. Recent quarterly net income readings include $152.0M on 2025-06-30 and $149.0M on 2026-03-31, with earlier highs such as $239.0M on 2018-06-30 and $173.0M on 2024-06-30. The most recent quarterly revenue was $531.0M. The most recent quarterly net income was $149.0M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Analyzing long-term margin stability and competitive positioning
HUNTINGTON INGALLS INDUSTRIES, INC.'s gross margin was relatively stable in the 30–43% range from 2019 through 2023, dropped to 12.8% for the 2024 period, and then rose sharply to 93.3% in the 2025 period-end data; the 2025 gross margin observation is a pronounced deviation from the prior multi-year range. That 2024–2025 sequence represents the most significant recent inflection in the gross margin series.
Shows a large negative inflection in 2021 (‑57.2%) after a 10.0% reading in 2019, followed by recovery to 7.2% by the 2024 period.
Remained in the mid-single-digit range across the series, falling to 5.4% in 2022 before recovering to 7.4% in 2024.
Understanding Profit Margins
Between Jan 2025 and Dec 2025, Huntington Ingalls Industries Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
HUNTINGTON INGALLS INDUSTRIES, INC. shows a variable relationship between reported net income and operating cash flow over the period. Net income TTM has remained positive in recent years, rising from $579.0M in 2022 to $681.0M in 2023 before falling to $550.0M in 2024. Operating cash flow exhibited a pronounced trough at -$766.0M in 2022, recovered to $393.0M by 2024, and strengthened sharply thereafter.
In the most recent data, operating cash flow has outpaced prior years’ levels, reaching $1.20B in the latest 2025 TTM observation while the latest reported trailing net income remains $550.0M (2024 TTM). The 2024 TTM period showed net income exceeding operating cash flow by about $157M, but the subsequent rise in operating cash flow to $1.20B represents a material improvement in cash generation. The most recent Operating Cash Flow (TTM) was $1.20B. The most recent Net Income (TTM) was $550.0M.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Huntington Ingalls Industries, Inc.’s ROE has declined over the most recent reported periods after a multi-year high. The ROE fell from 36.6% in 2020 to 19.4% in 2021 and 16.6% in 2022, reaching 11.8% for the latest period ending 2024-12-31. The most pronounced inflection occurred at the 2020 peak, followed by a steady downward trajectory through 2024.
Earlier history shows elevated ROE in the mid-2010s (34.7% in 2016, 34.6% in 2019 and 27.1% in 2015) and two negative readings in 2014 (-7.2%) and 2011 (-10.8%), indicating prior volatility before the 2020 peak. The most recent trailing twelve-month ROE was 11.8%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
HUNTINGTON INGALLS INDUSTRIES, INC. shows a marked improvement in operating cash flow over the most recent years: operating cash was deeply negative at -$766.0M in the 2022 TTM, rose to $393.0M in the 2024 TTM and accelerated further to $1.20B in the 2025 TTM. That change represents a clear inflection from cash-absorbing operations in 2022 to substantially positive operating cash generation by the latest reported period.
Investing cash flow has been consistently negative, reflecting ongoing outflows, and increased from -$348.0M in the 2024 TTM to -$521.0M in the 2025 TTM. Financing cash flow swung from a positive $356.0M in the 2024 TTM to a negative -$732.0M in the 2025 TTM, a reversal that follows similar large swings in prior years (for example, -$771.0M in 2023 and $1.31B in 2021). The most recent trailing-twelve-month values are:
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
HUNTINGTON INGALLS INDUSTRIES, INC.'s trailing P/E has moved within a moderate range over the past decade, with notable inflection points. After a stretch near the low-teens from 2013–2016 (around 12.5–13.8x), the ratio rose to a high of 19.0x in 2017 and remained elevated at 18.2x in 2019 before a clear trough at 9.8x in 2020. From 2021–2023 the P/E recovered into the mid-teens (13.7x → 15.7x → 15.2x), showing a partial re-rating after the 2020 decline.
In the most recent period the P/E eased slightly to 13.7x for the year ending 2024, bringing the ratio back toward the company’s longer-run low-teens range. The most recent Price-to-Earnings (P/E) ratio was 13.7x as of 2024-12-31.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.