Huntington Ingalls Wins Deal to Modify USS Helena Submarine
Huntington Ingalls Industries Inc. HII recently secured a modification contract for USS Helena (SSN 725). The deal has been awarded by the Supervisor of Shipbuilding, Conversion and Repair, USN, Newport News, VA.
Valued at $35.3 million, the contract is projected to be completed by October 2020. Huntington Ingalls will execute repair, maintenance, upgrades and modernization efforts on the USS Helena dry-docking selected restricted availability (DSRA).
Growing Demand for SSN
Global demand for submarines has increased in recent times, driven by the need for undersea capability enhancement and fleet expansion initiatives undertaken by emerging economies including India and China in the Asia-Pacific region. Nevertheless, North America still leads the global submarine market’s growth.
Coming to SSN, it is expected to be the largest segment in the global submarine market driven by several high-value procurement programs worldwide including the U.S. Navy’s Virginia-class procurement.
What’s Favoring Huntington Ingalls?
Huntington Ingalls specializes in manufacturing amphibious assault and expeditionary ships and provides more than 70% ships to the U.S. Navy. Interestingly, the fiscal 2021 defense budget proposal provisions for a spending plan of $32.3 billion for shipbuilding. Notably, such budgetary developments should enable the company to procure more significant contracts related to submarines like the latest one.
Looking ahead, per a report by Technavio, the global naval shipbuilding market is expected to reach $14.36 billion during the 2020-2024 period at a CAGR of approximately 3%. This, in turn, is likely to drive demand for various assault ships, including the LHA-9 class warships. Huntington Ingalls — being a major shipbuilding giant — should benefit. Other submarine manufacturers like Bae Systems PLC BAESY, Mitsubishi Heavy Industries, Ltd. MHVYF and General Dynamics GD are also likely to benefit.
Price Performance
Shares of Huntington Ingalls have lost 27.8% in a year compared with the industry’s decline of 32.5%.
Zacks Rank
Huntington Ingalls currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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General Dynamics Corporation (GD) : Free Stock Analysis Report
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Mitsubishi Heavy Industries, Ltd. (MHVYF) : Free Stock Analysis Report
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