Huntington Ingalls Secures $1.51B Deal to Construct LPD 31

Huntington Ingalls Industries Inc. HII recently secured a $1.51-billion modification contract for the design and construction of Landing Platform Dock (LPD) 31, the 15th amphibious transport dock of the San Antonio (LPD 17) class. Per the deal terms, the company will also construct the LPD 17 Flight II ship.

The majority of work related to this deal will be performed in Pascagoula, MS. The contract has been awarded by the Naval Sea Systems Command, Washington, DC and work related to the deal is scheduled to be over by February 2025.

San-Antonio Class Ships’ Specifics

Huntington Ingalls’ San Antonio-class ships are specifically designed to deliver advanced amphibious assault vehicles, landing craft air cushion and the MV-22 Osprey tilt-rotor aircraft to the U.S. Navy. The LPD 17 class ships replace the functions of more than 41 amphibious ships, and provide the Navy and Marine Corps with modern, networked and survivable sea-based platforms.

The company’s LPD-17 Flight II is the latest version of the San Antonio class that is built to meet the operational requirements of the U.S. Navy and Marine Corps. Its vessels are designed to incorporate minor modifications to feature a ship-to-shore connector, CH-53K helicopter and improved troop armament stowage.

What’s Favoring Huntington Ingalls?

The fiscal 2020 defense budget approved by the U.S. Senate in mid-2019 provisioned a spending plan of $34.7 billion for shipbuilding. The spending plan reflected a surge of 88.6% from the fiscal 2019 budget. Huntington Ingalls specializes in manufacturing amphibious assault and expeditionary ships, and provides more than 70% ships to the U.S. Navy. Notably, such budgetary developments should enable the company to procure more significant contracts related to ship construction like the latest one.

Interestingly, per Technavio, the global naval shipbuilding market is expected to grow by $14.36 billion during the 2020-2024 period at a CAGR of 3%. This, in turn, should potentially increase the demand for various assault ships, including the LPD’s. Huntington Ingalls — being a major shipbuilding giant — should benefit from such favorable projections, going forward.

Price Performance

Shares of Huntington Ingalls have plunged 15.5% over a year compared with the industry’s 33.6% decline.


Zacks Rank & Other Key Picks

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.

Other top-ranked stocks in the same sector include Leidos Holdings, Inc. LDOS, AeroVironment, Inc. AVAV and Moog Inc. MOG.A. While Leidos sports a Zacks Rank #1, AeroVironment and Moog carry a Zacks Rank #2, at present.

AeroVironment came up with average positive earnings surprise of 5.7% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has risen 8.6% to $1.77 over the past 90 days.

Moog pulled off average positive earnings surprise of 4.8% in the trailing four quarters. The Zacks Consensus Estimate for 2019 earnings has moved 0.9% north to $5.55 over the past 90 days.

Leidos Holdings delivered four-quarter positive earnings surprise of 11.2%, on average. The Zacks Consensus Estimate for 2020 earnings calls for an annual improvement of 3.1%.

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