Is Huntington Ingalls Industries Stock Underperforming the Nasdaq?

Huntington Ingalls Industries, Inc. (HII), headquartered in Newport News, Virginia, is America’s largest military shipbuilder, designing, constructing, overhauling, and repairing nuclear and non‑nuclear vessels for the U.S. Navy and Coast Guard. 

HII operates major shipyards (Newport News and Ingalls) and Mission Technologies, as well as technical services that provide naval nuclear support, fleet sustainment, unmanned systems, and defense solutions. The company has a market capitalization of $10.96 billion, which makes it a “mid-cap” stock. 

The company’s shares reached a 52-week high of $460 on Mar. 2, but are down 39.5% from that level. Over the past three months, Huntington Ingalls’ stock has declined by a 31.8%. On the other hand, the broader Nasdaq Composite ($NASX) index is up 19.2% over the same period. Therefore, HII has underperformed the Nasdaq Composite over this period. 

However, investors have also rewarded HII for its strong defense backlog and steady contract wins. Over the past 52 weeks, the stock has increased 18.6%, while the Nasdaq Composite index has risen 33.3%. This year, the stock has dropped 18.2%, while the broader index has gained 12.6%. The stock has been trading below its 200-day moving average since early May and below its 50-day moving average since late March.  

Recently, HII landed a $418 million contract to repair and maintain shipboard-based elevators on U.S. Navy aircraft carriers and amphibious ships. In the first quarter of this year, Huntington Ingalls also reported better-than-expected results and ended the quarter with a total backlog of $54 billion. 

We compare Huntington Ingalls’ performance with that of another aerospace and defense stock, Textron Inc. (TXT), which has gained 12.9% over the past 52 weeks but dropped marginally year-to-date. Therefore, HII has been the clear outperformer over the past year.

Wall Street analysts are moderately bullish on Huntington Ingalls’ stock. The stock has a consensus rating of “Moderate Buy” from the 13 analysts covering it. The mean price target of $375.91 implies a 35.1% upside from current levels. The Street-high price target of $441 indicates a 58.5% upside.