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
EUR/USD Forecast: Euro weakens as risk mood soursEUR/USD struggles to find a foothold and trades at a fresh weekly low below 1.1850 after closing in negative territory on Monday. In the absence of high-impact data releases, the risk-averse market atmosphere could make it difficult for the pair to stage a rebound.
Author  FXStreet
9 hours ago
EUR/USD struggles to find a foothold and trades at a fresh weekly low below 1.1850 after closing in negative territory on Monday. In the absence of high-impact data releases, the risk-averse market atmosphere could make it difficult for the pair to stage a rebound.
placeholder
Gold weakens as USD uptick and risk-on mood dominate ahead of FOMC MinutesGold (XAU/USD) attracts some follow-through selling for the second straight day and slides to the $4,922 area during the Asian session on Tuesday amid thin liquidity on the back of the Lunar New Year holidays in China.
Author  FXStreet
12 hours ago
Gold (XAU/USD) attracts some follow-through selling for the second straight day and slides to the $4,922 area during the Asian session on Tuesday amid thin liquidity on the back of the Lunar New Year holidays in China.
placeholder
Gold declines as trading volumes remain subdued due to holidays in ChinaGold price (XAU/USD) extends its losses for the second successive session, trading around $4,930 per troy ounce during the Asian hours on Tuesday.
Author  FXStreet
13 hours ago
Gold price (XAU/USD) extends its losses for the second successive session, trading around $4,930 per troy ounce during the Asian hours on Tuesday.
placeholder
Silver Price Forecast: XAG/USD slips below 50-day SMA on strong US DollarSilver price retreats during the North American session nearly 1%, after reaching a daily high of $78.20.
Author  FXStreet
18 hours ago
Silver price retreats during the North American session nearly 1%, after reaching a daily high of $78.20.
placeholder
Week Ahead: What Signals Will Fed Minutes Send? US December Core PCE DueThe fourth-quarter earnings season for U.S. stocks is drawing to a close. With market participation continuing to rise, the U.S. stock market has entered a new normal with an average dail
Author  TradingKey
Yesterday 09: 14
The fourth-quarter earnings season for U.S. stocks is drawing to a close. With market participation continuing to rise, the U.S. stock market has entered a new normal with an average dail
goTop
quote