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Will Weak Segment Sales Hurt Huntington's (HII) Q4 Earnings?

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Huntington Ingalls Industries, Inc. HII is slated to report fourth-quarter 2022 results on Feb 10 before market open.

Huntington Ingalls has a four-quarter earnings surprise of 22.01%, on average. Its fourth-quarter results might have been boosted by the acquisition of Alion. However, the overall top line remains bleak, with two of the three operating segments expected to have had unfavorably contributed to its top line in the soon-to-be-reported quarter.

Ingalls’Sales Prospect Remains Gloomy

Lower revenues from the Legend class NSC program, surface combatants and amphibious assault ships may have unfavorably contributed to the company’s Ingalls segment’s revenues in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for the Ingalls segment’s fourth-quarter revenues, pegged at $705.3 million, suggests a decline of 6.3% from the year-ago quarter’s reported figure.

Expectation for Newport News Remains Bleak

Decreased revenues from naval nuclear support services primarily due to lower volumes in submarine fleet support services and facility maintenance services may have had unfavorably contributed to revenues of the company’s Newport News business division. However, this is expected to have been partially offset by higher revenues in submarines and aircraft carriers.

The Zacks Consensus Estimate for the Newport News segment’s fourth-quarter revenues, pegged at $1480 million, suggests a decrease of 15.4% from the year-ago quarter’s reported figure.

Technical Solutions to Show Growth

The sales growth prospects for the Technical Solutions segment remain encouraging, primarily due to the acquisition of Alion, which may have had boosted revenues of this segment. However, the divestiture of the oil and gas business is expected to have partially impacted the performance of this unit in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for the Technical Solutions segment’s fourth-quarter revenues, pegged at $595 million, suggests an improvement of a whopping 91.3% from the year-ago quarter’s reported figure.

Huntington Ingalls Industries, Inc. Price and EPS Surprise

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

Huntington Ingalls Industries, Inc. price-eps-surprise | Huntington Ingalls Industries, Inc. Quote

Fourth-Quarter Estimates

With a poor sales performance expected from the majority of Huntington Ingalls’ segments, one might be skeptical about strong growth in the top line of the company in the soon-to-be-reported quarter. The Zacks Consensus Estimate for fiscal fourth-quarter sales is pegged at $2.74 billion, indicating a slip of 0.7% from the prior-year reported figure.

On the bottom-line front, while positive synergy from the Alion business acquisition is expected to have added impetus to Huntington Ingalls’ quarterly earnings in the fourth quarter, nonrecurring pre-tax transaction expenses related to this acquisition might have put pressure on its bottom line. Also, weak revenues projected from most of the segments might have unfavorably impacted quarterly earnings.

The Zacks Consensus Estimate for fourth-quarter earningsis pegged at $3.06 per share, indicating a decline of 29.7% from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for HII this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.

Huntington Ingalls has an Earnings ESP of -0.33% and a Zacks Rank #2. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks to Consider

Here are three defense players you may want to consider as they have the right combination of elements to post an earnings beat this season:

Aerojet Rocketdyne Holdings AJRD has an Earnings ESP of +2.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet has a four-quarter average negative earnings surprise of 2.17%. The Zacks Consensus Estimate for AJRD’s fourth-quarter sales and earnings is pegged at $578.5 million and 50 cents per share, respectively.

HEICO Corporation HEI has an Earnings ESP of +2.63% and a Zacks Rank #3. HEICO has a four-quarter average earnings surprise of 6.86%.

The Zacks Consensus Estimate for HEI’s first-quarter earnings is pegged at 57 cents per share, indicating a surge of 11.8% from the prior-year quarter’s reported figure. Its first-quarter sales estimate is pegged at $485.5 million, suggesting an improvement of 16.3% million from the year-ago quarter.

Virgin Galactic Holdings, Inc. SPCE has an Earnings ESP of +26.12% and a Zacks Rank #2. Virgin Galactic has a four-quarter average negative earnings surprise of 33.86%.

The Zacks Consensus Estimate for SPCE’s fourth-quarter earnings is pegged at a loss of 39 cents per share, indicating a decline of 25.8% from the prior-year quarter’s reported figure. Its 2021 sales estimate, pegged at $3.12 million, suggests a huge improvement when compared with $0.24 million reported in the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report

Heico Corporation (HEI) : Free Stock Analysis Report

Aerojet Rocketdyne Holdings, Inc. (AJRD) : Free Stock Analysis Report

Virgin Galactic Holdings, Inc. (SPCE) : Free Stock Analysis Report

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