A Huntington Ingalls Industries HII unit, Ingalls Shipbuilding, has won a $618 million contract to fund the construction of a new guided-missile destroyer for the U.S. Navy.
The Arleigh Burke-class guided missile destroyer, DDG 123, is the fourth of five destroyers Ingalls will be constructing as part of a multi-year contract awarded in Jun 2013. The company was awarded $55 million in advance procurement for DDG 123. With the latest contract, the value currently stands at $673 million.
The five-ship contract enables Ingalls to build ships more competently by procuring bulk material and utilizing the skilled workforce from ship to ship.
Ingalls has already delivered 28 Arleigh Burke-class destroyers to the U.S. Navy. Moreover, destroyers that are under construction at Ingalls are the John Finn (DDG 113), Ralph Johnson (DDG 114), Paul Ignatius (DDG 117), Delbert D. Black (DDG 119) and Frank E. Peterson Jr. (DDG 121).
The highly competent, multi-mission ships − Arleigh Burke-class destroyers – are capable of performing various operations, ranging from peacetime presence and crisis management to sea control and power projection. In support of the country’s military stratagem, DDGs can carry out simultaneous air, surface and subsurface strikes. The ship boasts numerous offensive and defensive weapons designed to support maritime defense needs well into the 21st century.
We remind investors that the Ingalls segment manufactures amphibious assault and expeditionary ships for the U.S. Navy. The division is the only builder of National Security Cutters (“NSCs”) for the U.S. Coast Guard and one of only two companies, the other being General Dynamics Corp. GD, that build the Navy's current fleet of DDG-51 Arleigh Burke -class destroyers.
We see the momentum to continue for Huntington Ingalls given the positive budget revision. The shipbuilding business outlook remains strong, particularly in the light of the enacted fiscal 2016 budget and fiscal 2017 proposal. Huntington Ingalls’ shipbuilding programs that were funded in the enacted 2016 budget comprise the construction of LPD-28 and the 9th NSC as well as accelerated development of LX(R) by two years. The fiscal 2017 budget request includes Ohio-Class replacement, advanced procurement for refueling CVN-74, advanced procurement for CVN-80, 2 Virginia class submarines, 2 DDG-51s, advanced procurement for LHA-8 and TAO(X), continuation of CVN-79, and the investment in a new Coast Guard Icebreaker.
Zacks Rank
Huntington Ingalls carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the same space include TransDigm Group Incorporated TDG and Spirit AeroSystems Holdings, Inc. SPR. While TransDigm sports a Zacks Rank #1 (Strong Buy), Spirit AeroSystems carries the same Zacks rank as Huntington Ingalls.
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