Seeking Alpha: Huntington Ingalls Needs A New Driver

Since it spun out from Northrop Grumman (NOC), Huntington Ingalls (HII) has done pretty well. Shares of this pure-play Navy shipbuilder have risen about 150% in its time as a publicly-traded company, handily beating other defense and shipbuilding companies like General Dynamics (GD) and Lockheed Martin (LMT).

At least some of Huntington Ingalls' performance can be tied to its progress in improving margins, moving through an order book that included some very low-margin business and putting its 9% margin targets very much into play. The question investors should probably ask now is how the company continues to improve its results. Projecting defense spending down the line is tricky, but major projects like carriers, submarines, and destroyers could fare better. I like the prospects for Huntington Ingalls continuing to improve its profitability and free cash flow generation, but the shares seem to already reflect continuing improvement here.

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Huntington Ingalls Needs A New Driver