Huntington Ingalls (HII) Wins $1.3B Deal for LPD 32 Warship
Huntington Ingalls Industries Inc. HII recently clinched a modification contract involving the landing platform dock (“LPD”) 32, an Amphibious Transport Dock warship. The award has been provided by the Naval Sea Systems Command, Washington, D.C.
Valued at $1.30 billion, the contract is expected to be completed by September 2029. Per the terms of the deal, Huntington Ingalls will procure the detail design and construction of the LPD 32.
Majority of the work related to this contract will be carried out in Pascagoula, MI.
LPDs and Huntington Ingalls
LPDs, also known as amphibious transport dock ships, are designed to deliver equipment and supplies ashore to the U.S. Navy, using air cushion or conventional landing craft and amphibious assault vehicles. These in turn, are supported by helicopters or vertical takeoff and landing aircraft such as the MV-22 Osprey.
LPDs aim at supporting amphibious assault, special operations, expeditionary warfare and humanitarian missions. For Huntington Ingalls, LPD is a long-running production program of expeditionary warfare ships, wherein the company has generated efficiencies through ship-over-ship learning.
The San Antonio class (LPD 17) is the newest addition to the U.S. Navy's 21st-century amphibious assault force, and these ships are crucial to the U.S. Navy's sea-base transformation. In 2022, Huntington Ingalls delivered Fort Lauderdale (LPD 28). The company is currently constructing Richard M. McCool Jr. (LPD 29), Harrisburg (LPD 30) and Pittsburgh (LPD 31).
Such developments and the latest contract win involving the construction of another LPD indicate the solid position that HII enjoys in the naval warfare market.
Looking Ahead
Per the latest report by Mordor Intelligence, the global naval vessels market’s worth is expected to increase $253 billion during the 2022-2031 period at a CAGR of 12.8%. This, in turn, should boost the growth of various assault ships, including LPDs. Huntington Ingalls, being a major shipbuilding giant, is likely to benefit from the aforementioned market growth.
Other major companies engaged in the manufacturing and supporting combat ships across the globe like General Dynamics GD, Bae Systems BAESY and Lockheed Martin LMT should also benefit from such market projections.
General Dynamics has been serving the U.S. Navy by constructing and delivering next-generation combat ships for decades. The company is a co-contractor with Huntington Ingalls for the construction of many assault ships.
GD boasts a long-term earnings growth of 8.6%. The Zacks Consensus Estimate for the company’s 2023 sales indicates a 4.2% improvement from the 2022 reported figure.
Bae Systems designs and manufactures naval ships and submarines, along with its state-of-the-art combat systems and equipment. It also offers an array of associated services, including training solutions, maintenance and modernization programs to support ships and equipment in service around the world.
BAESY boasts a long-term earnings growth of 13.7%. The Zacks Consensus Estimate for the company’s 2023 sales indicates a 25.4% improvement from the 2022 reported figure.
Lockheed manufactures integrated warfare systems and sensors (IWSS) programs such as Aegis Combat System (Aegis) that serve as an air and missile defense system for the U.S. Navy and international customers. Aegis is also a sea and land-based element of the U.S. missile defense system. The company has also manufactured the Littoral Combat Ship (LCS) and Multi-Mission Surface Combatant (MMSC) programs to provide surface combatant ships for the U.S. Navy and international customers that are designed to operate in shallow waters and the open ocean.
Lockheed boasts a long-term earnings growth of 6.9%. Its shares have gained 6.5% in the past year.
Price Movement
In the past year, shares of Huntington Ingalls have gained 2.6% against the industry’s 8.3% decline.
Image Source: Zacks Investment Research
Zacks Rank
Huntington Ingalls currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
General Dynamics Corporation (GD) : Free Stock Analysis Report
Bae Systems PLC (BAESY) : Free Stock Analysis Report
Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
