Company Reports

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US and among its allies, both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls Industries and its peers shrank during 2011-16 by 3.7% while they grew during 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow in the near term with modernization and robust demand reflected in the 2026 and 2027 budgets but should moderate to around 2.5%-3.0% over the next five years.

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US and among its allies, both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls Industries and its peers shrank during 2011-16 by 3.7% while they grew during 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow in the near term with modernization and robust demand reflected in the 2026 and 2027 budgets but should moderate to around 2.5%-3.0% over the next five years.

Second-quarter revenue grew 10.9% year on year to $3.4 billion, and segment operating margin jumped a whole point to 6.6%, yielding $224 million of profit. With the giant Navy contract for 14 nuclear subs finally in hand, management upped shipbuilding growth expectations to 6.6% and margin above 6%.

Huntington Ingalls Industries' first-quarter revenue grew 13.4% year on year to $3.1 billion. Segment operating margin held steady sequentially at 5.6%, yielding $172 million of profit. Management reaffirmed 2026 growth expectations closer to 5% and segment margin around 6%.

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US and among its allies, both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls Industries and its peers shrank during 2011-16 by 3.7% while they grew during 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow in the near term with modernization and robust demand reflected in the 2026 and 2027 budgets but should moderate to around 2.5%-3.0% over the next five years.

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US and among its allies, both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls Industries and its peers shrank in 2011-16 by 3.7% while they grew in 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow in the near term with modernization and robust demand reflected in the 2026 and 2027 budgets but should moderate to around 2.5%-3.0% over the next five years.

On Feb. 28, the US and Israel led widespread military strikes on Iran and signaled that the operation could last weeks. Iran retaliated, with consequences across the region and in the oil market. In premarket trading on March 2, most US defense contractors' stocks rose several percentage points.

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US and among its allies, both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls Industries and its peers shrank in 2011-16 by 3.7% while they grew in 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow in the near term with modernization and robust demand reflected in the 2026 and 2027 budgets but should moderate to around 2.5%-3.0% over the next five years.

Huntington Ingalls Industries' fourth-quarter revenue grew 16% year on year to $3.5 billion, while segment operating margin held steady sequentially at 5.6%, yielding $195 million of profit. HII offered 2026 revenue growth expectations of closer to 5% and segment margins exceeding 6%.

In early trading on Jan. 8, after President Donald Trump declared he would seek a $1.5 trillion fiscal 2027 defense budget, shares of US defense contractors appreciated by as much as 5%.

In afternoon trading on Jan. 7, after reports that President Trump had suggested he would prohibit US defense contractors' dividends and stock repurchases, shares of US defense contractors declined by as much as 5%.

On the heels of canceling its delayed Constellation-class frigate program after just two ships, the US Navy announced on Dec. 19 that it would award HII a contract to build frigates based on the established Legend-class cutter design.

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US and among its allies, both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls Industries and its peers shrank in 2011-16 by 3.7% while they grew in 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow with modernization in the near term but moderate to around 2.5%-3.0% over the next five years.

Huntington Ingalls Industries' third-quarter revenue grew 16% year on year to $3.2 billion, while segment operating margin held steady sequentially at 5.6%, yielding $179 million of profit. HII increased its 2025 expectations for revenue by $100 million and for free cash flow by $50 million.

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US and among its allies, both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls Industries and its peers shrank in 2011-16 by 3.7% while they grew in 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow with modernization in the near term but moderate to around 2.5%-3.0% over the next five years.

In afternoon trading on Oct. 15, after reports of a comment by US Treasury Secretary Scott Bessent about US defense contractors' stock repurchases at the "Invest in America Forum" hosted by CNBC, shares in the sector traded downward between around 1% and 3%.

Huntington Ingalls' second-quarter revenue grew 3.5% year on year to $3 billion, but operating profit decreased 14% to $163 million, lowering margin to 5.3%. Slower amphibious assault ship building and delays in key parts of an aircraft carrier were a drag on the quarter's results.

Regulated margins, mature markets, customer-paid research and development, and long-term revenue visibility allow defense contractors to deliver a lot of cash to shareholders, which makes up for relatively slow growth in this industry. Defense budgets usually ebb and flow with a nation's wealth and its perception of danger: in the US and among its allies both have been on the rise, and geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to Huntington Ingalls and its peers shrank in 2011-16 by 3.7% while they grew in 2017-24 by 5.8%, annualized. We think the contracting budget will continue to grow with modernization in the near term but moderate to around 2.5%-3.0% over the next five years.

Early on June 22 local time, the US deployed long-range bombers and missiles to strike Iran's underground nuclear enrichment and armament sites. Shares of US defense firms were mostly flat in premarket trading on June 23.

On June 13, Israel launched a series of strikes against Iranian facilities and personnel targeting its nuclear enrichment and armament programs. Shares of global defense contractors appreciated as much as 4% in early trading in reaction to the news.