Report
Valens Research

HII - Embedded Expectations Analysis - 2020 02 26

 Huntington Ingalls Industries, Inc. (HII:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with an 18.3x Uniform P/E, implying bearish expectations for the firm, and management may be concerned about government spending, their working capital management, and product launches

 Specifically, management may be concerned about the government's amphibious warship budget, the strength of their partnership with the Navy, and their ability to collect outstanding invoices. Moreover, they may lack confidence in their ability to sustain Newport News revenue growth, manage working capital, and improve their operational execution. Finally, management may be exaggerating the progress and success of their technical solutions and advanced weapons elevator trials and launches
Underlying
Huntington Ingalls Industries Inc.

Huntington Ingalls Industries is a military shipbuilding company and a provider of services to partners in government and industry. The company's segments include: Ingalls Shipbuilding, which designs and constructs non-nuclear ships for the United States Navy and United States Coast Guard, including amphibious assault ships, expeditionary warfare ships, surface combatants, and national security cutters; Newport News Shipbuilding, which is designing and constructing nuclear-powered ships, such as aircraft carriers and submarines, and the refueling and overhaul and the inactivation of such ships; and Technical Solutions, which includes businesses that are focused on life-cycle sustainment services.

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Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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