NEWPORT NEWS, Va. - Huntington Ingalls Industries (NYSE: NYSE:HII), the largest military shipbuilder in the United States with a market capitalization of $7.51 billion and annual revenue of $11.71 billion, announced on Wednesday that it has agreed to purchase the assets of South Carolina-based W International, a company specializing in complex metal fabrication for shipbuilding. According to InvestingPro analysis, HII's stock is currently trading below its Fair Value, suggesting potential upside opportunity for investors interested in the defense sector. The acquisition, which includes a manufacturing facility in Goose Creek, South Carolina, is set to bolster HII's capacity for producing modules and structures for U.S. Navy nuclear-powered submarines and aircraft carriers.
The Goose Creek site, which will be integrated into HII's Newport News Shipbuilding (NNS) division and renamed Newport News Shipbuilding - Charleston Operations, spans 45 acres with over 480,000 square feet of manufacturing space. It features advanced production facilities equipped with state-of-the-art equipment and tooling. The strategic location near Charleston provides access to barge and rail, and is in proximity to a growing shipbuilding ecosystem and skilled workforce.
HII's President and CEO, Chris Kastner, emphasized the acquisition's role in increasing build rates to meet Navy demands, particularly under the AUKUS security pact. The current employees at W International are expected to be offered positions with HII to continue their work at the site. Trading at a P/E ratio of 10.99, which InvestingPro analysis indicates is relatively low compared to near-term earnings growth, HII presents an interesting value proposition. Subscribers to InvestingPro can access 10+ additional key insights about HII's financial health and market position.
Matt Needy, currently NNS Vice President and Chief Transformation Officer, is set to become the general manager of the Charleston Operations. NNS is known for its expertise in designing, building, and refueling nuclear-powered aircraft carriers and is one of only two shipyards in the nation capable of constructing nuclear-powered submarines.
The transaction is anticipated to close in the fourth quarter of 2024, subject to regulatory approvals and certain closing conditions, including modifications from the Navy and other third parties.
HII, headquartered in Virginia, employs a workforce of 44,000 and is a global defense provider, delivering a range of military capabilities from ships to unmanned systems and cyber solutions. This move is part of HII's mission to support national security and maintain its position as a key player in the defense sector. The company has maintained a strong dividend track record, having raised its dividend for 13 consecutive years, currently offering a yield of 2.81%. For detailed analysis and comprehensive insights, investors can access HII's full Pro Research Report, available exclusively on InvestingPro, which covers all crucial aspects of the company's performance and prospects.
The information in this article is based on a press release statement from Huntington Ingalls Industries.
In other recent news, Huntington Ingalls Industries has experienced several significant developments. The company reported a decrease in third-quarter earnings for 2024, with earnings per share dropping to $2.56 from $3.70 in the previous year, and a 2.4% year-on-year decline in revenue to $2.7 billion. Despite these setbacks, the company secured a substantial $9.6 billion contract for amphibious warships, increasing its backlog to $49.4 billion. Analyst firms BofA Securities and TD Cowen adjusted their outlook on the company, highlighting ongoing shipbuilding execution challenges.
Huntington Ingalls also completed a public offering of $1 billion in senior notes, issued under an indenture agreement with U.S. Bank Trust Company. In leadership transitions, Kari Wilkinson is set to assume the role of president of the company's Newport News Shipbuilding division from January 1, 2025. The company also secured a $197 million contract to enhance U.S. Army combat vehicles through its Mission Technologies division.
The company's Newport News Shipbuilding division announced the completion of post-shakedown availability work on the USS Montana submarine. These recent developments reflect Huntington Ingalls Industries' ongoing efforts to navigate through challenges and secure its position in the defense industry.
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