Huntington Ingalls Gains Advantage From Robust Demand in Naval Ship Construction

Overview of Huntington Ingalls Industries

Huntington Ingalls Industries (HII) stands as a premier U.S. defense contractor, specializing in the design and construction of nuclear-powered aircraft carriers, submarines, and other sophisticated naval vessels. The company’s enduring partnership with the U.S. Navy and the ongoing push for naval modernization are expected to fuel its growth over the long term.

Despite these strengths, Huntington Ingalls, currently rated as a Zacks Rank #3 (Hold), is contending with supply chain disruptions and rising material expenses, which could present operational hurdles in the short run.

Growth Drivers for HII

Huntington Ingalls has solidified its leadership in the U.S. naval shipbuilding sector. As the exclusive builder and designer of nuclear-powered aircraft carriers in the country, the company’s vessels make up over 70% of the active U.S. Navy fleet. Recent milestones include the delivery of the Flight III destroyer DDG 128 Ted Stevens, the launch of DDG 129 Jeremiah Denton, the authentication of the DDG 135 Thad Cochran keel, and the completion of sea trials for DDG 1000 Zumwalt.

Beyond shipbuilding, HII is enhancing its technological edge and expanding its international collaborations. The company has entered into a memorandum of agreement with HD Hyundai Heavy Industries to explore joint initiatives and has teamed up with firms like Babcock International, Shield AI, and Thales to advance underwater and multi-domain mission technologies.

Demand for HII’s products remains robust, as demonstrated by $16.9 billion in new contract awards in 2025. This has pushed the company’s order backlog to a record $53.14 billion as of December 31, 2025, with $31.99 billion of that amount already funded. This substantial backlog ensures strong revenue visibility for the foreseeable future.

Challenges Facing HII

Huntington Ingalls depends significantly on external suppliers and subcontractors for essential materials and components. Any interruptions, price hikes, or delays from these partners can increase project costs and disrupt schedules, potentially squeezing profit margins if actual expenses surpass contract estimates.

The Newport News Shipbuilding division has encountered difficulties in aircraft carrier production, stemming from labor shortages, supply chain issues, and infrastructure limitations. In 2025, these factors led to negative cumulative catch-up adjustments totaling approximately $350 million. While the company is actively recruiting and training new talent, high employee turnover and the lengthy training required for specialized shipbuilding roles may continue to impact project execution in the near term.

Recent Stock Performance

Over the past three months, shares of HII have climbed 25.9%, significantly outpacing the aerospace and defense industry, which saw a 3.6% increase during the same period.

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Other Noteworthy Stocks in the Industry

Investors seeking alternatives in the sector might consider Draganfly (DPRO), GE Aerospace (GE), and Howmet Aerospace (HWM). Each of these companies currently holds a Zacks Rank #2 (Buy).

• For Draganfly, the Zacks Consensus Estimate projects a 2026 loss of $1.11 per share, reflecting an improvement from the previous year. Sales are expected to reach $5.9 million in 2026, a 24% year-over-year increase.
• GE Aerospace has delivered an average earnings surprise of 14.27% over the last four quarters. The 2026 consensus earnings estimate stands at $7.44 per share, indicating a 16.8% annual growth.
• Howmet Aerospace posted an average earnings surprise of 7.24% in the past four quarters. For 2026, consensus earnings are forecast at $4.55 per share, representing a 20.7% year-over-year rise.

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Additional Resources

If you’re interested in more recommendations from Zacks Investment Research, you can download the report on the 7 Best Stocks for the Next 30 Days.

• GE Aerospace (GE): Free Stock Analysis Report
• Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report
• Howmet Aerospace Inc. (HWM): Free Stock Analysis Report
• Draganfly Inc. (DPRO): Free Stock Analysis Report

This article was first published by Zacks Investment Research.

Zacks Investment Research