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Huntington Ingalls (HII) Tops Q4 Earnings, Wins Ample Orders

Huntington Ingalls Industries ' HII fourth-quarter 2016 adjusted earnings of $3.67 per share surpassed the Zacks Consensus Estimate of $2.48 by 48%.

Adjusted earnings also improved 88.2% from $1.95 per share in the year-ago quarter, driven by substantial top line as well as operating income growth. Barring the adjustment, the company's reported earnings came in at $4.20 per share, reflecting a huge year-over-year improvement of 296.2%.

For 2016, the company's adjusted earnings came in at $10.15, up 38.5% year over year. The full-year earnings figure however missed the Zacks Consensus Estimate of $10.42 by 2.6%.

Total Revenue

Total revenue in the fourth quarter was $1.92 billion, above the Zacks Consensus Estimate of $1.85 billion. The top line also improved 0.9% from the year-ago figure of $1.91 billion. The upside was primarily driven by higher contribution from its Ingalls and Technical Solutions divisions.

For 2016, the company reported revenues worth $7.07 billion, up 0.7% year over year. The full-year earnings figure was almost in line with the Zacks Consensus Estimate of $7.08 billion.

Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise

Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise | Huntington Ingalls Industries, Inc. Quote

Segment Details

On Dec 1, 2016, the company closed its previously announced acquisition of Camber Corporation and simultaneously formed a new reporting segment, Technical Solutions. So now, Huntington Ingalls generates revenues through the following three segments:

Newport News Shipbuilding : Segment revenues were $1,119 million, down 6.3% year over year due to lower sales in Aircraft Carriers and Submarines. Operating income improved 19.8% to $139 million, owing to favorable changes in overhead costs and the receipt of a $15 million local government incentive grant, partially offset by lower risk retirement on the VCS program.

Ingalls Shipbuilding : Segment revenues were $641 million, up 10.5% year over year on higher revenues in surface combatants and the Legend-class National Security Cutter ("NSC") program. Operating income at the segment increased 44.1% to $85 million, courtesy of higher risk retirement and improved performance by the LPD, DDG and NSC programs.

Technical Solutions : Segment revenues were $186 million, up 20.8% year over year primarily due to the acquisition of Camber and higher revenues in oil and gas and nuclear and environmental services. Operating income at the segment was $1 million, against the year-ago period's operating loss of $51 million. The improvement was driven by better performance in oil and gas and fleet support.

Backlog

The company received new orders worth $5.2 billion during 2016, as a result of which its total backlog reached to $21 billion as of Dec 31, 2016.

Financial Update

Cash & cash equivalents as of Dec 31, 2016, were $720 million, down from $894 million as of Dec 31, 2015.

Long-term debt, as of Dec 31, 2016, was $1,278 million, slightly above the 2015-end level of $1,273 million.

Cash from operating activities in 2016 was $822 million, compared with $861 million in 2015.

Zacks Rank

Huntington Ingalls currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

AAR Corp. AIR reported second-quarter fiscal 2017 earnings of 35 cents per share, up 34.6% from the year-ago figure of 26 cents.

Rockwell Collins Inc. COL reported financial results for first-quarter fiscal 2017 ended Dec 31, 2016. The company's adjusted earnings per share of $1.20 surpassed the Zacks Consensus Estimate of $1.15 by 4.3%. Reported earnings, however, slipped 0.8% from $1.21 earned a year ago.

Raytheon Company RTN reported fourth-quarter 2016 adjusted earnings from continuing operations of $1.88 per share, beating the Zacks Consensus Estimate of $1.86 by 1.1%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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