Key Stats for HII Stock
- Price Change for HII stock: -10.6%
- HII Share Price as of Feb. 5: $369.38
- 52-Week High: $436.14
- HII Stock Price Target: $380.60
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What Happened?
Huntington Ingalls Industries (HII) shares fell more than 10% after the company released its fourth-quarter and full-year 2025 results and updated its cash flow outlook.
The defense contractor posted strong headline numbers because quarterly revenue grew about 15% year over year to roughly $3.5 billion, and full-year sales reached $12.5 billion.
Earnings also improved, as fourth-quarter EPS rose to about $4.04 and full-year EPS increased to roughly $15.39.
However, management warned that free cash flow will turn negative in the near term, and it recorded unfavorable adjustments at the Newport News segment tied to aircraft carrier cost pressures, which rattled investors.
Management also emphasized continued investment in yard capacity and digital shipbuilding, because it deployed more than $400 million of capital in 2025 to support future growth and execution.
In addition, the company is returning cash to shareholders through a regular dividend, and it currently offers a yield of about 1.5% with a payout ratio near the mid-30% range.
These fundamentals suggest the recent sell-off reflects concerns about timing and cash conversion rather than a sudden deterioration in demand for HII’s core programs.
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What the Market Is Telling Us About HII Stock
The steep one-day drop in HII stock suggests investors are using the earnings release to recalibrate expectations for free cash flow, margins, and capital intensity rather than questioning the long-term demand picture.
HII’s latest report showed expanding operating margins and rising segment profits across its shipbuilding and mission technologies businesses, but the company’s guidance for negative near-term free cash flow and project adjustments at Newport News raised questions about execution and cost control.
Shipbuilding is inherently complex and capital-intensive, and large naval programs can experience swings in working capital, milestone timing, and risk retirements that cause cash generation to diverge from accrual earnings in certain periods.
Analysts remain constructive on HII’s position in aircraft carriers, submarines, and amphibious ships, and the current consensus price target of about $380.60 sits only modestly above the latest close, implying a more balanced risk‑reward profile after the sell-off.
Given these mixed signals, investors who believe HII can manage near-term cash pressures and continue expanding margins may view the post-earnings pullback as an opportunity, but others may prefer to wait for clearer evidence that free cash flow is stabilizing.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
