Will Poor Margin Performance Impact HII's Q1 Earnings?

Huntington Ingalls Industries, Inc. HII is scheduled to release first-quarter 2025 earnings on May 1, 2025, before market open.

The company has a four-quarter average negative earnings surprise of 0.84%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Dismal sales growth expectations, along with weak operating margin performance, are projected to have impacted HII’s overall bottom line.

Anticipated Growth in Revenues in HII’s Ingalls Unit

Higher revenues from surface combatants are likely to have boosted the Ingalls segment’s top line in the first quarter.

The Zacks Consensus Estimate for the Ingalls unit’s revenues is pegged at $663.3 million, which indicates growth of 1.3% from the year-ago quarter’s figure.

Huntington Ingalls Industries, Inc. Price and EPS Surprise

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

HII’s Newport News Unit Likely to Have Seen Improvement

Higher sales volumes from the Columbia class submarine program, along with solid volumes from naval nuclear support services, are likely to have boosted the Newport News segment’s revenue performance. However, dismal performance of the Virginia-class aircraft carrier is likely to adversely impact overall top-line results.

HII’s Mission Technologies Unit Likely to Post Dismal Performance

Lower sales volumes from C5ISR (Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance and Reconnaissance) due to the absence of non-recurring product revenues are likely to have negatively impacted the company’s Mission Technologies segment revenues in the first quarter of 2025.

The Zacks Consensus Estimate for this unit’s revenues is pegged at $0.69 billion, which indicates a decline of 8.7% from the year-ago quarter’s figure.

Q1 Estimates for HII

Sales decline anticipated at the company’s Mission Technologies segment is likely to have outweighed the positive sales growth return from its Ingalls and Newport News segments might have weighed on its overall first-quarter revenue performance.

The Zacks Consensus Estimate for HII’s first-quarter sales is pegged at $2.79 billion, which indicates a decrease of 0.6% from the prior-year number.

Lower operating margins in the majority of its segments, owing to unimpressive program performance as a result of labor inexperience and delays due to supply-chain disruptions, are likely to have hurt its earnings in the first quarter of 2025. Additionally, dismal sales growth expectations are projected to have further impacted its overall bottom line.

The Zacks Consensus Estimate for HII’s first-quarter earnings is pegged at $2.90 per share, which indicates a year-over-year decline of 25.1%.

What the Zacks Model Unveils for HII

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

Earnings ESP: Huntington Ingalls has an Earnings ESP of -3.09%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: HII currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Below, we have mentioned players from the same sector that have the right combination of elements to beat on earnings in the upcoming releases.

Axon Enterprise AXON is set to report first-quarter 2025 earnings on May 7, 2025, after market close. It has an Earnings ESP of +9.28% and a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for AXON’s earnings is pegged at $1.27 per share, indicating year-over-year growth of 10.4%. The consensus estimate for its sales is pegged at $589.1 million, indicating year-over-year growth of 27.9%.

CAE CAE is set to report its fiscal fourth-quarter 2025 results on May 13, after market close. It has an Earnings ESP of +4.91% and a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for CAE’s earnings is pegged at 31 cents per share, indicating year-over-year growth of 244.4%. The consensus estimate for its sales is pegged at $906.7 million, indicating year-over-year growth of 8.5%.

Transdigm Group TDG is expected to report fiscal second-quarter earnings on May 6, before market close. It has an Earnings ESP of +6.22% and carries a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for TDG’s earnings is pegged at $8.85 per share, indicating year-over-year growth of 10.8%. The consensus estimate for sales is pegged at $2.17 billion, indicating year-over-year growth of 12.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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