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Is Huntington Ingalls (HII) Poised for a Beat in Q3 Earnings?
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Huntington Ingalls Industries, Inc. (HII - Free Report) is set to report third-quarter 2017 results on Nov 8, before the market opens.
Last quarter, this military shipbuilder posted a positive earnings surprise of 22.52%. While the company’s Ingalls segment is expected to drive strong growth in the third quarter, the Newport News segment is likely to be a spoilsport.
Let’s discuss these factors influencing Huntington Ingalls’ quarterly results, in brief.
Ingalls Unit – A Key Catalyst
Huntington Ingalls’ Ingalls segment manufactures amphibious assault and expeditionary ships for the U.S. Navy and is the only builder of National Security Cutters (NSCs) for the U.S. Coast Guard. Notably, this division launched LHA 7, the second America-class amphibious assault (AAA) ship in May which has been driving sales volumes for this segment, lately. Based on the company’s better-than-expected second-quarter result, we expect the soon-to-be reported quarter’s results to reflect similar solid sales volumes, as well.
In line with this, the Zacks Consensus Estimate for the company’s Ingalls business segment is pegged at $595 million for the third quarter, reflecting an annual improvement of 4.4%.
Newport News Segment May Dent Growth: Here’s Why
Huntington Ingalls’ Newport News is the nation's sole designer, builder and refueler of nuclear-powered aircraft carriers.This division, which generates more than 50% of the company’s total revenues, has been underperforming for the last couple of years. Going ahead, no near-term improvement can be expected anytime soon for this business unit.
In line with this, our third-quarter consensus estimate for Newport News unit stands at $988 million, reflecting an annual decline of 16.3%. However, at the onset of the third quarter, this business unit signed a contract with United Steelworkers of America as the largest bargaining unit, which in turn may boost this division’s results.
Other Factors to Consider
In addition to the aforementioned facets of Huntington Ingalls’ quarterly results, a steady inflow of orders from Pentagon is expected to provide an impetus to third-quarter sales. Among the notable deals that the company won in the yet-to-be-reported quarter, worth mentioning is the $105-million modification contract for upgrading nuclear submarines, another modification deal worth $149 million to procure additional long-lead-time material for USS Enterprise (CVN 80) and a $2.8-billion contract to support the refueling and complex overhaul of USS George Washington (CVN73).
Moreover, the company’s Technical Solutions business continues to gain traction from Camber Corp’s acquisition.
As a whole, for the third quarter, the Zacks Consensus Estimate for earnings reflects improvement of 22.5% year over year, while the consensus for revenues is estimated at $1.78 billion, implying a 5.9% year-over-year increase.
What Does the Zacks Model Unveils?
Our proven model shows that Huntington Ingalls has chances of beating third-quarter earnings estimates because it has the right combination of two key components. While the company currently carries a Zacks Rank #3 (Hold), its Earnings ESP is +0.84%. This is because the Most Accurate estimate is pegged at $2.80, higher than the Zacks Consensus Estimate of $2.78. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Huntington Ingalls Industries, Inc. Price and EPS Surprise
Raytheon Company reported third-quarter 2017 earnings from continuing operations of $1.97 per share, beating the Zacks Consensus Estimate of $1.90 by 3.7%. The figure also improved 7.1% from $1.84 recorded in the year-ago quarter.
Rockwell Collins Inc. reported results for fourth-quarter fiscal 2017 (ended Sep 30, 2017). The company’s adjusted earnings per share of $1.80 came in line with the Zacks Consensus Estimate. Reported earnings grew 10.4% from $1.63 per share a year ago.
General Dynamics Corporation (GD - Free Report) reported third-quarter 2017 earnings from continuing operations of $2.52 per share, beating the Zacks Consensus Estimate of $2.43 by 3.7%. Its third-quarter total revenues of $7,580 million missed the Zacks Consensus Estimate of $7,892 million by 4%.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Is Huntington Ingalls (HII) Poised for a Beat in Q3 Earnings?
Huntington Ingalls Industries, Inc. (HII - Free Report) is set to report third-quarter 2017 results on Nov 8, before the market opens.
Last quarter, this military shipbuilder posted a positive earnings surprise of 22.52%. While the company’s Ingalls segment is expected to drive strong growth in the third quarter, the Newport News segment is likely to be a spoilsport.
Let’s discuss these factors influencing Huntington Ingalls’ quarterly results, in brief.
Ingalls Unit – A Key Catalyst
Huntington Ingalls’ Ingalls segment manufactures amphibious assault and expeditionary ships for the U.S. Navy and is the only builder of National Security Cutters (NSCs) for the U.S. Coast Guard. Notably, this division launched LHA 7, the second America-class amphibious assault (AAA) ship in May which has been driving sales volumes for this segment, lately. Based on the company’s better-than-expected second-quarter result, we expect the soon-to-be reported quarter’s results to reflect similar solid sales volumes, as well.
In line with this, the Zacks Consensus Estimate for the company’s Ingalls business segment is pegged at $595 million for the third quarter, reflecting an annual improvement of 4.4%.
Newport News Segment May Dent Growth: Here’s Why
Huntington Ingalls’ Newport News is the nation's sole designer, builder and refueler of nuclear-powered aircraft carriers.This division, which generates more than 50% of the company’s total revenues, has been underperforming for the last couple of years. Going ahead, no near-term improvement can be expected anytime soon for this business unit.
In line with this, our third-quarter consensus estimate for Newport News unit stands at $988 million, reflecting an annual decline of 16.3%. However, at the onset of the third quarter, this business unit signed a contract with United Steelworkers of America as the largest bargaining unit, which in turn may boost this division’s results.
Other Factors to Consider
In addition to the aforementioned facets of Huntington Ingalls’ quarterly results, a steady inflow of orders from Pentagon is expected to provide an impetus to third-quarter sales. Among the notable deals that the company won in the yet-to-be-reported quarter, worth mentioning is the $105-million modification contract for upgrading nuclear submarines, another modification deal worth $149 million to procure additional long-lead-time material for USS Enterprise (CVN 80) and a $2.8-billion contract to support the refueling and complex overhaul of USS George Washington (CVN73).
Moreover, the company’s Technical Solutions business continues to gain traction from Camber Corp’s acquisition.
As a whole, for the third quarter, the Zacks Consensus Estimate for earnings reflects improvement of 22.5% year over year, while the consensus for revenues is estimated at $1.78 billion, implying a 5.9% year-over-year increase.
What Does the Zacks Model Unveils?
Our proven model shows that Huntington Ingalls has chances of beating third-quarter earnings estimates because it has the right combination of two key components. While the company currently carries a Zacks Rank #3 (Hold), its Earnings ESP is +0.84%. This is because the Most Accurate estimate is pegged at $2.80, higher than the Zacks Consensus Estimate of $2.78. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A positive ESP along with a favorable Zacks Rank serves as a meaningful and leading indicator of a likely positive earnings surprise. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Huntington Ingalls Industries, Inc. Price and EPS Surprise
Huntington Ingalls Industries, Inc. Price and EPS Surprise | Huntington Ingalls Industries, Inc. Quote
Recent Peer Releases
Raytheon Company reported third-quarter 2017 earnings from continuing operations of $1.97 per share, beating the Zacks Consensus Estimate of $1.90 by 3.7%. The figure also improved 7.1% from $1.84 recorded in the year-ago quarter.
Rockwell Collins Inc. reported results for fourth-quarter fiscal 2017 (ended Sep 30, 2017). The company’s adjusted earnings per share of $1.80 came in line with the Zacks Consensus Estimate. Reported earnings grew 10.4% from $1.63 per share a year ago.
General Dynamics Corporation (GD - Free Report) reported third-quarter 2017 earnings from continuing operations of $2.52 per share, beating the Zacks Consensus Estimate of $2.43 by 3.7%. Its third-quarter total revenues of $7,580 million missed the Zacks Consensus Estimate of $7,892 million by 4%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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