Huntington Ingalls Industries, Inc. HII is slated to report third-quarter 2015 results on Nov 5, 2015 before the market opens. Last quarter, the company had posted a positive earnings surprise of 12.92%. Let’s see how things are turning out for the third quarter.
Factors at Play
The largest military shipbuilder in the U.S., Huntington Ingalls is the prime industrial employer in Virginia. Huntington Ingalls is the sole designer and manufacturer of nuclear powered aircraft carriers in the U.S. Over 70% of the active U.S. Navy fleet consists of Huntington Ingalls ships.
During the quarter, Huntington Ingalls’ Newport News Shipbuilding division received a $106 million contract from the U.S. Navy to provide engineering and industrial support to U.S. Navy submarines, special mission submersibles, submarine support facilities and related programs. If all options are exercised, the total value of the contract will go up to $564 million.
On the flipside, UniversalPegasus, a wholly owned subsidiary of Huntington Ingalls, continues to be affected by the prolonged weakness in the oil and gas market. In the absence of a favorable turn in the market, the company foresees pressure in the business to linger.
Earnings Whispers
Our proven model does not conclusively show that Huntington Ingalls is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Huntington Ingalls has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.09 per share.
Zacks Rank: Huntington Ingalls carries a Zacks Rank #3, which increases the predictive power of ESP. However, when combined with a 0.00% ESP, surprise prediction becomes difficult.
We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Peer Releases
General Dynamics Corporation GD announced third-quarter 2015 earnings from continuing operations of $2.28 per share, comfortably surpassing the Zacks Consensus Estimate of $2.10 by 8.6%. Earnings also increased 11.2% from the prior-year figure of $2.05, backed by a solid operating performance.
Lockheed Martin Corp. LMT posted third-quarter 2015 earnings of $2.77 per share, comfortably surpassing the Zacks Consensus Estimate of $2.70 by 2.6%. Earnings also increased 0.4% from $2.76 per share a year ago, as higher fighter jet demand led to increased revenues.
Northrop Grumman NOC reported third-quarter 2015 adjusted earnings of $2.41 per share, beating the Zacks Consensus Estimate of $2.21 by 9% and increasing 3.9% from $2.32 per share in the year-ago quarter.
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 >>
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
Be the first to comment