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Will Newport News Drive Huntington Ingalls (HII) Q3 Earnings?

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Huntington Ingalls Industries, Inc. (HII - Free Report) is set to report third-quarter 2019 results on Nov 7, before market open.

In the trailing four quarters, this military shipbuilder's earnings outperformed the Zacks Consensus Estimate twice and missed on the other two occasions. The average positive surprise is 3.05% for the period.

Growth in Newport News and Ingalls Shipbuilding divisions is likely to reflect on the company’s overall top-line performance in the quarter to be reported.

Let’s discuss the factors influencing Huntington Ingalls’ third-quarter results.

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.

Over the last few quarters, the company’s Newport News division has generated higher revenues, primarily driven by increased volumes in aircraft carrier construction, aircraft carrier RCOH programs and Navy nuclear support services.

The Zacks Consensus Estimate for third-quarter revenues at Newport News is pegged at $1,235 million, implying a 4.8% improvement from the year-ago quarter’s reported figure.

Ingalls Division — Another Growth Driver

Huntington Ingalls has been making strategic investments in its Ingalls Shipbuilding business division, which has secured certain key contracts over the last few quarters.

Interestingly, the company’s Ingalls Shipbuilding division made deliveries of National Security Cutter (NSC) 8 during the third quarter of 2019. This is likely to have contributed favorably to the segment’s quarterly revenues.

In line with this, the Zacks Consensus Estimate for third-quarter revenues at the company's Ingalls Shipbuilding division is pegged at $699 million, indicating a 0.7% improvement from the figure reported in the year-ago quarter.

Moreover, the Zacks Consensus Estimate for the company’s third-quarter revenues stands at $2.20 billion, suggesting an increase of 5.5% from the year-earlier quarter’s reported figure.

Other Factors at Play

Huntington Ingalls is expected to incur significant expenses concerning the damage of its DDG 119 Delbert D. Black ship while delivering the new floating drydock in March. The reconstruction led to significant additional costs for exterior structural repairs. This is likely to have dampened the company’s bottom line in the third quarter.

Considering these factors, the consensus mark for third-quarter earnings is pegged at $3.63, calling for a decline of 31.4% from the figure reported in the year-ago period.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Huntington Ingalls in the third quarter. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Huntington Ingalls has an Earnings ESP of +2.09% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls Industries, Inc. Price and EPS Surprise

Recent Defense Releases

Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2019 earnings of $5.49 per share, which surpassed the Zacks Consensus Estimate of $4.74 by 15.8%. However, the bottom line declined 22.8% from $7.11 per share reported in the year-ago quarter.

Lockheed Martin Corp (LMT - Free Report) reported third-quarter 2019 earnings of $5.66 per share, which surpassed the Zacks Consensus Estimate of $5.03 by 12.5%. The bottom line also improved 10.1% from $5.14 in the year-ago quarter.

Aerojet Rocketdyne Holdings (AJRD - Free Report) reported third-quarter 2019 adjusted earnings of 35 cents per share, which missed the Zacks Consensus Estimate of 46 cents by 23.9%. The bottom line also slumped 60.3% from 88 cents in the year-ago quarter.

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