HII

Huntington Ingalls is the United States' largest military shipbuilder, the sole or principal builder of nuclear aircraft carriers and a key submarine producer — a near-monopoly position underpinned by long-dated Navy programs that provide rare multi-year revenue visibility. FY2025 showed a healthy recovery: revenue grew 8.2% to $12.5B, operating income jumped 22.8% to $657M, net income rose 10.0% to $605M and diluted EPS reached $15.39. Most striking was operating cash flow, which more than tripled (+204.3%) to $1.20B, a sign of improving program execution and milestone collections after a softer FY2024.

The investment case rests on durability and price. Shipbuilding margins are structurally thin (5.3% operating, 4.8% net) and ROE of 11.9% is moderate, but the franchise is defensive: revenue has compounded steadily from $9.52B in FY2021, and demand is anchored to national-security priorities rather than the economic cycle. The balance sheet is sound, with liabilities/equity of 1.51x, long-term debt trending down, and equity up 8.7% to $5.07B. The company returns cash via a growing dividend ($213M, +3.4%) and buybacks.