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What's in Store for Huntington Ingalls' (HII) Q2 Earnings?

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Huntington Ingalls Industries, Inc. (HII - Free Report) is set to report second-quarter 2021 results on Aug 5, before market open.

In the last reported quarter, this military shipbuilder delivered an earnings surprise of 46.03%. In the trailing four quarters, the company came up with an earnings surprise of 1.14%, on average.

The company’s Newport News and Ingalls segments are likely to have boosted its second-quarter revenues.

Let’s discuss how things have shaped up prior to the announcement.

Newport News Segment — A Key Catalyst

Huntington Ingalls’ Newport News is the nation's sole designer, builder and refueler of nuclear-powered aircraft carriers. The segment generates more than 50% of the company’s total revenues.

Increased volumes in aircraft carrier construction and submarine construction tend to boost revenues for the company’s Newport News business division. Also, in recent times, fleet support services provided by the Newport News segment, led by rising demand, have been boosting revenues.

We expect these trends to have boosted the unit’s second-quarter revenues. The Zacks Consensus Estimate for second-quarter revenues at Newport News is pegged at $1,281 million, implying a 14.2% improvement from the year-ago quarter’s reported figure.

Other Factors to Consider

The company has been making strategic investments in its Ingalls Shipbuilding division. This has enabled the unit to secure certain key contracts in the recent past, which in turn led to considerable revenue growth. We expect this trend to have continued and thereby favorably impacted the company’s overall top line in the second quarter.

In line with this, the Zacks Consensus Estimate for second-quarter revenues of the Ingalls Shipbuilding division is pegged at $635 million, indicating a 2.1% improvement from the figure reported in the year-ago quarter.

Such solid revenue growth projections for the majority of the company’s segments make us optimistic about its overall revenue performance in the second quarter. The Zacks Consensus Estimate for second-quarter revenues is pegged at $2.12 billion, implying an uptick of 4.46 % from the year-ago quarter’s reported figure.

A favorable FAS/CAS adjustment related to the company’s pension and post-retirement benefit plans is expected to have boosted the operating margin for the company, which in turn might have had a favorable impact on its quarterly earnings. Also, solid revenue growth expectations, coupled with favorable post-acquisition cost synergies and robust cost-management initiatives by the company, are likely to have benefited its bottom-line performance in the second quarter.

In line with such projections, the Zacks Consensus Estimate for second-quarter earnings per share is pegged at $2.49, implying a surge of 91.5% from the year-ago quarter’s reported figure.

Huntington Ingalls Industries, Inc. Price and EPS Surprise

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Huntington Ingalls this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But this is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Huntington Ingalls carries a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Defense Releases

Raytheon Technologies’ (RTX - Free Report) second-quarter 2021 adjusted earnings per share (EPS) of $1.23 outpaced the Zacks Consensus Estimate of 92 cents by 33.7%.

General Dynamics (GD - Free Report) reported second-quarter 2021 earnings from continuing operations of $2.61 per share, which beat the Zacks Consensus Estimate of $2.52 by 3.6%.

Hexcel Corporation (HXL - Free Report) reported second-quarter 2021 adjusted earnings of 8 cents per share, which exceeded the Zacks Consensus Estimate of a penny.

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