- Wondering if Huntington Ingalls Industries at around US$381.79 is still offering value after a strong run, or if the easy gains are already behind it.
- The stock has seen a 6.4% decline over the past 7 days and a 14.1% decline over the past 30 days, while the 1 year return stands at 89.4% and the 3 year and 5 year returns are 96.7% and 108.6% respectively.
- Recent attention on the company has centered on its role in U.S. defense and shipbuilding programs. This often keeps investors focused on contract wins, backlog trends, and capital allocation decisions. These themes can influence how the market reacts to the stock, especially after such strong multi year returns.
- Huntington Ingalls Industries currently holds a value score of 4 out of 6. Next up is a look at how different valuation methods assess the stock today and how a broader framework can give you an even clearer picture by the end of this article.
Approach 1: Huntington Ingalls Industries Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes projected future cash flows and discounts them back to today using a required return, giving an estimate of what the business might be worth right now.
For Huntington Ingalls Industries, the latest twelve month Free Cash Flow is about $822.6 million. Analysts have provided explicit estimates out to 2030, where Free Cash Flow is projected at $874.0 million, and Simply Wall St extends the forecasts further using its own assumptions. These projected cash flows, expressed in dollars, are then discounted using a 2 Stage Free Cash Flow to Equity model.
Bringing all those discounted cash flows together gives an estimated intrinsic value of $454.12 per share. Compared to the recent share price of about $381.79, the model implies the stock trades at roughly a 15.9% discount to this intrinsic value. On this DCF view alone, the shares appear to be undervalued.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Huntington Ingalls Industries is undervalued by 15.9%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.
Approach 2: Huntington Ingalls Industries Price vs Earnings
P/E is a common way to value profitable companies because it links the share price directly to current earnings, which are usually more stable and comparable than short term cash flows or sales alone. In general, higher growth expectations and lower perceived risk can support a higher P/E, while slower growth and higher risk tend to justify a lower P/E.
Huntington Ingalls Industries currently trades on a P/E of 24.76x. That sits below the Aerospace & Defense industry average P/E of 35.69x and the peer group average of 37.49x. Simply Wall St also calculates a proprietary “Fair Ratio” for the stock of 28.55x, which is the P/E level suggested by factors such as its earnings growth profile, industry, profit margins, market cap and risk characteristics.
This Fair Ratio aims to be more tailored than a simple peer or industry comparison because it adjusts for company specific traits rather than assuming all firms deserve the same multiple. Comparing the current 24.76x P/E with the 28.55x Fair Ratio indicates that Huntington Ingalls Industries is trading below that tailored level, based on this metric.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Huntington Ingalls Industries Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as simple stories you choose for Huntington Ingalls Industries. Each Narrative ties your view of its backlog, margins, contracts and technology shift to a set of forecasts and a Fair Value. You can then compare that Fair Value to the current share price to help you decide whether the stock looks appealing or stretched.
On Simply Wall St, Narratives sit inside the Community page and are used by millions of investors as an accessible tool. Each Narrative connects three things you already think about: the company story, the numbers it might produce in future, and the price that would make sense if that story plays out.
For Huntington Ingalls Industries, one Narrative on the bullish end uses a Fair Value of about US$465 and leans into themes like higher long term margins and sector support. A more cautious Narrative closer to US$310 focuses on policy risk, budget debates and execution challenges. Both Narratives are kept up to date as new news, earnings and contract data arrive so you can see which story you believe fits best.
For Huntington Ingalls Industries, we will make it really easy for you with previews of two leading Huntington Ingalls Industries Narratives:
Start with a constructive, higher fair value story if you think the recent pullback is just a pause, or stress test your view with a more cautious fair value that sits below the current share price.
🐂 Huntington Ingalls Industries Bull Case
Fair value used in this bullish Narrative: US$450.23 per share.
Current price vs this Narrative: about 15.2% below its fair value on these assumptions.
Revenue growth assumption in this Narrative: 7.68% a year.
- Focuses on Huntington Ingalls Industries as a core U.S. naval contractor with a very large backlog and a role in aircraft carriers, submarines and Mission Technologies.
- Emphasises throughput, shipyard modernisation and digital tools as key levers for turning the backlog into earnings and maintaining margins.
- Treats recent sector views and the updated fair value as support for a modest discount to intrinsic value at current prices.
🐻 Huntington Ingalls Industries Bear Case
Fair value used in this cautious Narrative: about US$309.83 per share.
Current price vs this Narrative: about 23.2% above its fair value on these assumptions.
Revenue growth assumption in this Narrative: 4.69% a year.
- Highlights concentration in U.S. government shipbuilding programs and the risk that policy shifts or budget debates could affect the order book.
- Points to labor, contract structure and cost pressures as potential headwinds for margins even if revenue continues to grow.
- Uses a fair value well below the current share price, which implies limited room for disappointment if assumptions on growth or profitability are not met.
Do you think there's more to the story for Huntington Ingalls Industries? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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