Huntington Ingalls Industries Buys Columbia Group's ESD - Analyst Blog
The largest military shipbuilding company in the U.S., Huntington Ingalls Industries, Inc. (HII) announced that it has acquired the Engineering Solutions Division (“ESD”) of the Columbia Group.
The ESD serves the U.S. Navy and is involved in the production of specialized manned and unmanned undersea vehicles. The division will now operate as a subsidiary of Huntington under the name of Undersea Solutions Group and report to Newport News Shipbuilding’s Submarine and Fleet Support division.
As Huntington itself is engaged in building naval ships and submarines, this acquisition will complement its business and enhance its capabilities. It will also allow the company to meet the rising demand for unmanned vehicles from the U.S. Navy, thereby adding to its top line. Thus, the ESD acquisition will increase Huntington’s expertise and consolidate its position in the market.
In addition to acquisitions to improve its product-offerings and enhance its capabilities, the company restructures its business to trim costs and improve operational efficiency. Recently, the company combined two of its subsidiaries, S.M. Stollar Corp. and Newport News Nuclear, to form one company – Stollar Newport News Nuclear (“SN3”) (Read More: Huntington Ingalls Combines Two Companies to Create SN3)
Apart from focusing on operational efficiency, the company is committed to maximize shareholder value and boost its bottom line further. In Oct 2014, the company doubled its quarterly cash dividend to 40 cents a share in addition to boosting its share repurchase program from $300 million to $600 million and extending the program’s deadline from Oct 31, 2017 to Oct 31, 2019.
In the third quarter 2014, the company received new orders worth $400 million and exited the quarter with a total backlog of $22.8 billion. The recent acquisition is expected to boost its order flow further.
Huntington is scheduled to release its fourth-quarter 2014 results on Feb 19, 2015. It beat on earnings in three of the last four quarters with an average beat of 12.32%. For the current quarter, the Zacks Consensus Estimate stands at $2.02.
Huntington currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include The Boeing Company (BA), Rockwell Collins Inc. (COL) and Curtiss-Wright Corp. (CW), each carrying a Zacks Rank #2 (Buy).
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