Huntington Ingalls Industries Valuation Lab: Stress-Test the 7.5% Margin

Lab / Price since the decision

Hold HII NYSE

Loading the latest close

The decision close is below. Prices after it load when this page opens, and only after that session has finished.

Decision close

$263.75 Oct 6, 2026

Latest close

— Last completed close

Later closes

—after the decision date

Move across the chart, or focus it and use the arrow keys. The figure at the top always stays on the latest close.

Exchange close. Dividends, trading costs, taxes, and position size are not included. This is not an account return and not a recommendation. Yahoo Finance

Closes by date

HII close. Change is versus the decision close.

Date	close	Change
Oct 6, 2026	$263.75	—

2026-10-06 $263.75

This page makes the model behind the Huntington Ingalls Industries analysis interactive. The original question was not simply whether the U.S. Navy would order more ships. It was how much profit and cash HII could extract from orders already in hand.

The defaults reproduce the article’s Base case. Shipbuilding revenue grows 6% annually from the midpoint of 2026 guidance, Mission Technologies grows 5%, and Shipbuilding reaches a 7.5% operating margin in 2030. Those are author estimates, not company guidance.

Move the 7.5% instead of trusting it

THE ARCHIVE / VALUATION LAB

Huntington Ingalls Industries Valuation Lab

Move margin before growth. See how the same backlog can produce very different per-share values.

Deterministic scenario

Quick startBearBaseBullReset

Present fair value$2852030 price discounted to today

Versus current price+9.2%$260.67 · 2026-10-07

2030 EPS$26.632030 $426

20% MOS price$228From selected fair value

01 / ASSUMPTIONS

Change the assumptions

Shipbuilding revenue CAGR

6.0%

Shipbuilding operating margin

7.5%

Mission revenue CAGR

5.0%

Mission operating margin

6.5%

2030 exit P/E

16.0×

Required return

10.0%

Advanced FCF and share assumptions

Diluted shares

39.4M

Non-operating retirement benefit

$213M

2030 FCF margin

6.0%

2030 P/FCF

17.0×

02 / EARNINGS BRIDGE

From revenue to EPS

Shipbuilding revenue

$13.00B

Mission revenue

$3.77B

Segment operating income

$1.22B

Pretax income

$1.26B

Net income / EPS

$1.05B / $$26.63

Tax rate 17%, non-segment items −$64M, and interest expense −$105M are held constant.

03 / MARGIN × GROWTH

Present value across shipbuilding margin and growth

All other assumptions stay at their selected values. The dot marks the nearest cell.

Present value per share by shipbuilding growth and margin

CAGR margin	6.0%	7.0%	7.5%	8.0%	9.0%

>10% below priceWithin ±10%>10% above price

04 / CROSS-CHECK

Do EPS and FCF point the same way?

Current price$261

EPS method$285

FCF method$290

2030 FCF $1.01B × 17.0x

Educational scenario calculator · This is not a probability simulation or investment advice. It starts from the midpoint of 2026 guidance; the current price is the October 7, 2026 close. Company facts and author assumptions are kept separate.

How to read the tool

Move Shipbuilding margin from 6% to 9% before changing anything else. Holding growth constant isolates what normalization does to EPS and fair value. Then change Shipbuilding growth to see the operating leverage if throughput improvements convert into revenue.

The exit P/E moves the answer quickly but does not explain the economics. Check the earnings bridge before raising the multiple. If the EPS and FCF methods diverge sharply, revisit the retirement-benefit, capital-spending, and working-capital assumptions.

Model mechanics

Shipbuilding and Mission Technologies revenue compound for four years from the 2026 starting point.

$$Revenue_{2030}=Revenue_{2026}(1+g)^4$$

The model applies segment margins, then adjusts for non-segment items, interest, non-operating retirement benefits, and tax. It multiplies 2030 EPS by the selected exit P/E and discounts the result to the publication date.

$$PV=\frac{EPS_{2030}\times Exit\ P/E}{(1+r)^{4.230}}$$

The sensitivity table holds Mission growth and margin, the multiple, required return, and share count at the currently selected values. It changes only Shipbuilding growth and margin. Each cell is therefore a mechanical scenario result, not a probability forecast.

What this model does not answer

• When program-level EAC adjustments or schedule delays will occur
• How contract type and incentive fees will affect realized margin
• How rates and pension-asset returns will change non-operating retirement income
• The annual path of capital spending and working capital
• The valuation multiple the market will assign in 2030

The point is not to produce one precise target price. It is to identify which assumption dominates the conclusion and re-test that assumption with each earnings release.

Disclosure: This tool documents a personal investment-research process and is not investment advice. Fair values are author estimates based on assumptions, and actual outcomes may differ materially.