Why Huntington Ingalls Stock Popped 6% Today

Source The Motley Fool

Huntington Ingalls (NYSE: HII) stock has been a losing bet for defense investors this month. Shares of the Navy shipbuilder got torpedoed for an 18% loss in the first week of February after "missing earnings" in its Q4 2024 report. Bouncing back briefly, the stock continued to float around the $160-a-share level -- until today.

Huntington Ingalls stock is getting a lift from investment banker Citigroup, which issued a note over the holiday weekend, in which it suggested the stock is being unfairly punished for its miss. As of 2:50 p.m. ET, the stock was up around 5%.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

What Citi says about Huntington Ingalls

In a brief note carried on The Fly this morning, Citi cut its Huntington Ingalls price target to $235 per share. Nevertheless, the banker maintained its "buy" rating on HII stock.

Unfortunately for investors, The Fly had no further details on Citi's thinking -- nothing to really guide us whether the analyst's optimism holds water -- but that's OK. We're clever investors, right? We can figure this out ourselves!

Is Huntington Ingalls stock really a buy?

So, what do we know about Huntington Ingalls stock, based on the latest numbers from management?

Well, we know the company's sales are stalled. Revenue grew less than 1% in 2024, compared to 2023, to $11.5 billion. But we also know that with a $6.3 billion market capitalization, HII stock costs only about 0.55 times trailing sales, which historically has been a cheap valuation for a defense stock.

Even accounting for the company's $2.6 billion in net debt on the balance sheet, HII stock sells for an enterprise value-to-sales ratio of less than 0.8x. While not as cheap as 0.55, it's still pretty cheap!

The stock looks similarly cheap when valued on earnings. Its P/E ratio is only 11.5, quite appropriate for an 11% long-term projected earnings growth rate. And the stock pays a 3.3% dividend yield. Really, the biggest knock against HII stock today is its weak free cash flow.

If you can forgive it that small fault, I think there's plenty of reason to call Huntington Ingalls stock a buy.

Should you invest $1,000 in Huntington Ingalls Industries right now?

Before you buy stock in Huntington Ingalls Industries, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Huntington Ingalls Industries wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $850,946!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

Learn more »

*Stock Advisor returns as of February 7, 2025

Citigroup is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
WTI Crude Breaks $90, Brent Crude Approaches $100, Middle East Shipping Risks Drive Continuous Rise in Oil Prices On July 23, international oil prices continued to rise sharply. WTI crude oil ( USOIL) prices broke through the $90 mark intraday, rising over 4%, while Brent crude oil ( UKOIL) rose to a
Author  TradingKey
6 hours ago
On July 23, international oil prices continued to rise sharply. WTI crude oil ( USOIL) prices broke through the $90 mark intraday, rising over 4%, while Brent crude oil ( UKOIL) rose to a
placeholder
WTI climbs above $87.00 as Middle East conflict threatens key choke pointsWest Texas Intermediate (WTI) oil price extends gains for the fifth consecutive day, trading around $87.30 per barrel during the Asian hours on Thursday. Crude oil prices surged as escalating Middle East tensions stoked fears of widespread supply disruptions.
Author  FXStreet
15 hours ago
West Texas Intermediate (WTI) oil price extends gains for the fifth consecutive day, trading around $87.30 per barrel during the Asian hours on Thursday. Crude oil prices surged as escalating Middle East tensions stoked fears of widespread supply disruptions.
placeholder
Gold rallies to over two-week high, eyes $4,150 as traders track US-Iran diplomacy effortsGold (XAU/USD) rallies to an over two-week high, around the $4,140-$4,141 area, during the Asian session on Wednesday amid hopes that US-Iran diplomacy could ease energy prices and temper hawkish US Federal Reserve (Fed) expectations.
Author  FXStreet
Yesterday 09: 52
Gold (XAU/USD) rallies to an over two-week high, around the $4,140-$4,141 area, during the Asian session on Wednesday amid hopes that US-Iran diplomacy could ease energy prices and temper hawkish US Federal Reserve (Fed) expectations.
placeholder
WTI Oil hits fresh six-week highs at $86.00 as tensions in the Middle East escalateOil prices continue rallying on Wednesday as hostilities in Iran threaten to escalate out of control, and reports of vessels turning around in the Red Sea heighten concerns about supply disruptions.
Author  FXStreet
Yesterday 08: 14
Oil prices continue rallying on Wednesday as hostilities in Iran threaten to escalate out of control, and reports of vessels turning around in the Red Sea heighten concerns about supply disruptions.
placeholder
Japanese Yen bears turn cautious near four-decade low amid looming intervention risksThe USD/JPY enters a bullish consolidation phase during the Asian session on Wednesday and holds steady above the 163.00 mark, near its highest level since 1986 set the previous day.
Author  FXStreet
Yesterday 01: 18
The USD/JPY enters a bullish consolidation phase during the Asian session on Wednesday and holds steady above the 163.00 mark, near its highest level since 1986 set the previous day.
goTop
quote