Huntington Ingalls Industries, Inc. (HII) Stock Valuation — DCF Analysis
Aerospace & Defense · NYSE
Current Price
$297.68
Intrinsic Value
$469.74
+36.6% margin of safety
COMPETITIVE MOAT
↑Naval Shipbuilding Dominance
HII holds a near-monopoly in U.S. aircraft carrier and amphibious assault ship construction. This deep expertise and specialized infrastructure create immense barriers to entry for competitors.
↑Long-Term Government Contracts
The company benefits from multi-year, high-value contracts with the U.S. Navy. These predictable revenue streams and the lengthy shipbuilding cycles provide significant stability.
↑Skilled Workforce & Training
HII's investment in programs like WAVES and its Master Shipbuilder recognition highlight a commitment to developing and retaining a highly skilled, specialized workforce essential for complex naval projects.
INVESTMENT RISKS
↓Government Budget Volatility
While a 355-ship navy is proposed, actual defense spending can fluctuate. Changes in political priorities or economic downturns could impact HII's order book.
↓Program Delays and Cost Overruns
Large, complex shipbuilding projects are inherently prone to delays and cost increases. These can negatively affect profitability and investor sentiment, as seen in recent stock performance.
↓Technological Disruption
The advancement of unmanned systems, like HII's ROMULUS USV, while an opportunity, also signals a potential shift in naval warfare that could alter future shipbuilding needs.
Base case
HII base case valuation
A base case discounted cash flow model for HII estimates an intrinsic value of about $469.74 per share, against a current price of $297.68. The model assumes 12.2% annual free cash flow growth, a 10.0% discount rate, and a 11x exit multiple.
Intrinsic Value
$469.74
Margin of safety
+36.6%
Expected annual return
+9.6%
Base case assumptions: 12.2% annual growth, 10.0% discount rate, 11x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the HII valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Huntington Ingalls Industries, Inc. respond.
Open DCF Calculator for HIICompany Overview
Huntington Ingalls Industries, Inc. (HII) stands as a prominent American enterprise specializing in the comprehensive lifecycle management of military vessels, encompassing their design, construction, modernization, and maintenance. The company's diverse operations are segmented into three core divisions: Ingalls Shipbuilding, Newport News Shipbuilding, and Technical Solutions. HII is a primary builder of non-nuclear ships, delivering amphibious assault ships, expeditionary warfare vessels, surface combatants, and national security cutters to both the U.S. Navy and U.S. Coast Guard. Furthermore, it plays a critical role in providing nuclear-powered ships, including aircraft carriers and submarines, along with essential associated services such as refueling, extensive overhauls, and inactivation procedures. Beyond direct shipbuilding, Huntington Ingalls Industries offers specialized naval nuclear support services, covering the full spectrum from design and construction to maintenance and disposal for active U.S. Navy nuclear fleets, in addition to maintaining nuclear reactor prototypes. Its broader technical and support portfolio includes life-cycle sustainment services for the U.S. Navy fleet and other maritime clients; sophisticated information technology and mission-specific solutions for defense, intelligence, and federal civilian agencies; nuclear facility management, operational support, and environmental remediation services for various government bodies and private sector entities; comprehensive defense and federal solutions; and the development of cutting-edge unmanned systems. Established in 1886, Huntington Ingalls Industries, Inc. is headquartered in Newport News, Virginia.
Financial Metrics — HII Stock Valuation Data
Revenue/Share (TTM)
$326.95
FCF/Share (TTM)
$26.97
ROIC (TTM)
5.0%
ROE (TTM)
12.0%
P/FCF
11.1x
EV/EBITDA
12.0x
FCF Yield
9.04%
Debt/Equity
0.57x
Based on trailing twelve-month data, HII shows a free cash flow per share of $26.97 and a ROIC of 5.0%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 11.1x and FCF yield of 9.04% are important context metrics when evaluating HII's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of HII?
Huntington Ingalls Industries, Inc. currently generates $26.97 in free cash flow per share. At the current price of $297.68, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is HII undervalued?
HII trades at a P/FCF ratio of 11.1x with a free cash flow yield of 9.04%. This relatively low P/FCF may suggest the stock is attractively priced relative to its cash generation. However, whether HII is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value HII stock using DCF?
To perform a DCF valuation on Huntington Ingalls Industries, Inc.: (1) Start with the trailing free cash flow per share ($26.97) as the base, (2) project future FCF growth over 5-10 years based on Aerospace & Defense industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting HII's risk profile — with a debt-to-equity of 0.57x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to HII?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Huntington Ingalls Industries, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Aerospace & Defense trends, then discounting those amounts to today's dollars. HII's ROIC of 5.0% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect HII stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For HII, with a debt-to-equity ratio of 0.57x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 12.0x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See HII PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value HII with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.