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Huntington Ingalls Industries, Inc. (HII) Hit a 52 Week High, Can the Run Continue?

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Shares of Huntington Ingalls (HII - Free Report) have been strong performers lately, with the stock up 8.7% over the past month. The stock hit a new 52-week high of $275.85 in the previous session. Huntington Ingalls has gained 5.8% since the start of the year compared to the -1.8% move for the Zacks Aerospace sector and the -3.6% return for the Zacks Aerospace - Defense industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 1, 2024, Huntington Ingalls reported EPS of $6.9 versus consensus estimate of $4.27.

For the current fiscal year, Huntington Ingalls is expected to post earnings of $16.45 per share on $11.7 billion in revenues. This represents a -3.63% change in EPS on a 2.19% change in revenues. For the next fiscal year, the company is expected to earn $18.73 per share on $12.04 billion in revenues. This represents a year-over-year change of 13.87% and 2.84%, respectively.

Valuation Metrics

Huntington Ingalls may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Huntington Ingalls has a Value Score of A. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 16.7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 17.1X. On a trailing cash flow basis, the stock currently trades at 10.5X versus its peer group's average of 12.4X. Additionally, the stock has a PEG ratio of 2.57. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Huntington Ingalls currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Huntington Ingalls meets the list of requirements. Thus, it seems as though Huntington Ingalls shares could still be poised for more gains ahead.

How Does HII Stack Up to the Competition?

Shares of HII have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Leidos Holdings, Inc. (LDOS - Free Report) . LDOS has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of D.

Earnings were strong last quarter. Leidos Holdings, Inc. beat our consensus estimate by 23.78%, and for the current fiscal year, LDOS is expected to post earnings of $7.48 per share on revenue of $15.25 billion.

Shares of Leidos Holdings, Inc. have gained 3.1% over the past month, and currently trade at a forward P/E of 15.12X and a P/CF of 12.43X.

The Aerospace - Defense industry is in the top 37% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HII and LDOS, even beyond their own solid fundamental situation.

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