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Will Segmental Performance Aid Huntington's (HII) Q4 Earnings?

Huntington Ingalls Industries, Inc. HII is slated to report its fourth-quarter and full-year 2022 results on Feb 9 before market open.

Huntington Ingalls delivered an earnings surprise of 29.45% in the last reported quarter. The company came up with a four-quarter average earnings surprise of 7.59%. Sales growth in the Mission Technologies segment may have benefited its top line in the fourth quarter, partially offset by an expected decline in sales in the Ingalls and Newport segment.

Ingalls

Lower revenues in the Legend-class National Security Cutter program and amphibious assault ships might have negatively impacted the Ingalls segment’s performance in the fourth quarter. The Zacks Consensus Estimate for Ingalls’ fourth-quarter revenues, pegged at $579.2 million, suggests a decline of 0.3% from the year-ago quarter’s reported figure.

Newport

Lower volume growth in submarine and aircraft carrier support services is expected to have dented the segment’s revenue performance in the soon-to-be-reported quarter. The consensus estimate for Newport’s fourth-quarter revenues, pegged at $1,477.8 million, indicates a decline of 3.9% from the year-ago quarter’s reported figure.

Mission Technologies

Higher volumes in Defense & Federal Solutions, mainly due to the acquisition of Alion, may have aided the overall revenues of the company in the fourth quarter. The consensus mark for Mission Technologies’ fourth-quarter revenues, pegged at $587.7 million, suggests an increase of 0.3% from the year-ago quarter’s reported figure.

Huntington Ingalls Industries, Inc. Price and EPS Surprise

Huntington Ingalls Industries, Inc. Price and EPS Surprise
Huntington Ingalls Industries, Inc. Price and EPS Surprise

Huntington Ingalls Industries, Inc. price-eps-surprise | Huntington Ingalls Industries, Inc. Quote

Fourth-Quarter Estimates

The weak sales performance in the Ingalls and Newport segment may have dented the overall revenue performance of the company in the fourth quarter. However, expected improved sales in the Mission Technologies segment may have offset the downside impact on the overall sales performance.

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Moreover, higher inflation, supply-chain challenges and a tight labor market are some of the factors which may have continued to impact HII’s top line in the fourth quarter of 2022. However, Huntington’s continuous effort to mitigate the impact of such factors may have contributed to the overall outcome of fourth-quarter sales.

The Zacks Consensus Estimate for fourth-quarter sales is pegged at $2.69 billion, indicating an increase of 0.5% from the prior-year reported figure. Anticipated overall growth in sales, along with a solid operating margin, is likely to have boosted HII’s fourth-quarter bottom line.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.14 per share, indicating growth of 5% from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Huntington Ingalls this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here.

Huntington Ingalls has an Earnings ESP of -3.08% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are two defense players you may want to consider as these have the right combination of elements to post an earnings beat this season:

Virgin Galactic SPCE has an Earnings ESP of +1.85% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for SPCE’s fourth-quarter sales indicates an improvement of 271.4% from the prior-year quarter’s reported figure.

Spirit Aerosystems SPR has an Earnings ESP of +67.14% and a Zacks Rank #3. Spirit boasts a long-term earnings growth rate of 8.5%.

The Zacks Consensus Estimate for SPR’s fourth-quarter sales is pegged at $1.33 billion, implying an improvement of 24.7% from the prior-year quarter’s reported figure. In the last reported quarter, Spirit Aerosystems delivered an earnings surprise of 61.54%.

An Upcoming Release

Embraer S.A. ERJ boasts a long-term earnings growth rate of 17%. ERJ has a four-quarter average earnings surprise of 171.43%.

The Zacks Consensus Estimate for Embraer’s fourth-quarter sales indicates an increase of 55% from the prior-year reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report

Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report

Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report

Virgin Galactic Holdings, Inc. (SPCE) : Free Stock Analysis Report

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