Huntington Ingalls Beats Earnings, Free Cash Flow Negative
Huntington Ingalls beat Q2 earnings estimates by 38 percent and raised full-year shipbuilding guidance to $10.2 billion–$10.4 billion, yet trailing twelve-month free cash flow sits at negative $300 mi
Huntington Ingalls Raises Guidance but Cash Stays Negative
NEW YORK, September 19 —
Huntington Ingalls Industries, Inc. (HII) has beaten earnings estimates four quarters running, raised shipbuilding guidance twice, and locked in $76.6 billion in submarine contract modifications; yet the $272.86 stock sits roughly $95 below analyst consensus because free cash flow has run negative while earnings surprised to the upside. The second half must do what the first could not.
- Q2 EPS of $5.27 beat consensus by 38%; shipbuilding revenue of $2.7 billion grew 15.7% year over year.
- Management raised full-year shipbuilding revenue guidance to $10.2B, $10.4B and tightened the margin floor to 6.0%.
- TTM free cash flow is negative $300 million; H2 must generate roughly $530M, $630M to reach the guided floor.
Revenue Is Not the Problem
Newport News Shipbuilding, the only U.S. division that designs and builds nuclear-powered aircraft carriers and submarines, generated $1.8 billion in Q2 2026 revenue, up 15.3%, while Ingalls (non-nuclear amphibious assault ships and surface combatants) contributed $845 million, up 16.7%. Together the two segments posted $2.7 billion, the fourth consecutive quarter of double-digit growth. Management raised 2026 shipbuilding revenue guidance to $10.2 billion to $10.4 billion, and $6.7 billion in new Q2 contract awards brought total backlog to $54 billion. The $76.6 billion in submarine contract modifications for VCS Block VI and Columbia class, with roughly $25 billion flowing to Newport News, cements that demand.
The Cash Conversion Problem
Q2's earnings beat obscures an uncomfortable ledger: the quarter consumed $31 million in operating cash, and trailing twelve-month free cash flow sits at negative $300 million. Management reiterated full-year FCF guidance of $500 million to $600 million per the Q2 earnings call, blaming receipt and disbursement timing, but that explanation requires H2 to generate north of $530 million in free cash flow, roughly the entire reiterated range compressed into six months. No single recent quarter has demonstrated that conversion rate. Mission Technologies, HII's segment covering AI, autonomous systems, and cyberspace operations, posted $760 million in Q2 revenue, a 3.9% decline, but held above a 10% EBITDA margin.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| HII | $10.8B | 13.1x | -1.2% |
| LHX | $46.0B | 18.3x | -12.9% |
| LDOS | $16.0B | 10.0x | -32.0% |
| NOC | $74.9B | 17.3x | -8.0% |
| TDG | $60.0B | 22.5x | -15.3% |
| GD | $95.5B | 19.0x | +9.4% |
When the Thesis Resolves
The $272.86 stock against a $368 analyst consensus target prices in a successful H2 cash conversion at 13.1x forward earnings. That is not an obviously expensive multiple for the sole U.S. builder of nuclear carriers and submarines, but the first half did not supply the evidence. Management's target of 15% full-year throughput improvement, against 12% year to date, is the nearest visible proxy for whether H2 operating receipts can actually inflect. If Q3 shows FCF turning significantly positive, a DCF calculator run on the reiterated guidance yields numbers consistent with that analyst target. Until then, run the free Huntington Ingalls Industries, Inc. deep-dive → for the latest numbers.
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Frequently Asked Questions
Did Huntington Ingalls beat earnings?
Yes. Q2 earnings per share of $5.27 beat consensus by 38 percent. The company has beaten estimates four quarters running while raising shipbuilding guidance.
Why is HII stock trading below analyst consensus?
Trailing twelve-month free cash flow is negative $300 million, even though earnings are beating. Management reiterated full-year free cash flow guidance of $500, $600 million, requiring the second half to generate $530, $630 million.
What is the analyst price target for HII?
The consensus target is $368 per share, implying a 13.1 times forward earnings multiple. The stock currently trades at $272.86.
How much backlog does Huntington Ingalls have?
Total backlog stands at $54 billion. The company also locked in $76.6 billion in submarine contract modifications for VCS Block VI and Columbia class vessels.
What segments drive Huntington Ingalls revenue?
Newport News Shipbuilding, the only U.S. builder of nuclear-powered aircraft carriers and submarines, generated $1.8 billion in Q2, up 15.3 percent. Ingalls, which builds amphibious assault ships and surface combatants, contributed $845 million, up 16.7 percent.
Huntington Ingalls Industries has beaten earnings estimates four quarters in a row, raised full-year shipbuilding guidance twice, and locked in $76.6 billion in submarine contract modifications—yet the stock sits roughly $95 below the analyst consensus target and trailing free cash flow is negative $300 million. The second half of 2026 must do what the first half could not.