• If you are wondering whether Huntington Ingalls Industries at around US$403 per share still offers value, the starting point is understanding what the current price actually reflects.
• The stock has posted a 15.3% return year to date, with a 1.7% move over the last week, a 3.4% decline over the last month, and returns of 104.5% over 1 year, 103.5% over 3 years, and 116.1% over 5 years.
• These moves have kept Huntington Ingalls Industries on the radar for investors tracking Aerospace & Defense names. Recent coverage has focused on how the company is positioned within that sector and what the current share price suggests about expectations baked into the stock.
• On Simply Wall St's valuation framework, Huntington Ingalls Industries currently has a value score of 3 out of 6. This will be unpacked using several valuation approaches, followed by a look at a more holistic way to think about value at the end of this article.

Approach 1: Huntington Ingalls Industries Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of a company’s future cash flows and discounts them back to today’s value, aiming to show what the business could be worth based on those projected cash streams.

For Huntington Ingalls Industries, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is reported at about $822.6 million. Analyst and extrapolated projections suggest Free Cash Flow of $560.5 million in 2026 and $874 million in 2030, all in $. Beyond the first few analyst years, Simply Wall St extends the cash flow path using its own assumptions to complete the 10 year curve.

When all those projected cash flows are discounted back and combined with a terminal value, the model produces an estimated intrinsic value of roughly $466.22 per share. Against a current share price around $403, this framework points to the shares trading at about a 13.5% discount, which indicates Huntington Ingalls Industries screens as undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Huntington Ingalls Industries is undervalued by 13.5%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.

Approach 2: Huntington Ingalls Industries Price vs Earnings (P/E)

For a profitable company like Huntington Ingalls Industries, the P/E ratio is a useful shorthand for how much you are paying for each dollar of earnings. It ties the share price directly to the bottom line, which is what ultimately supports long term returns.

What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually points to a lower one.

Huntington Ingalls Industries currently trades on a P/E of 26.25x. That compares with an Aerospace & Defense industry average P/E of about 39.40x and a peer group average of 46.17x. Simply Wall St’s proprietary “Fair Ratio” for Huntington Ingalls Industries is 26.25x, which reflects factors such as its earnings growth profile, profit margins, industry, market cap and risk characteristics. This Fair Ratio is more tailored than a simple comparison with peers or the broad industry, because it adjusts for the company’s specific fundamentals rather than assuming that all Aerospace & Defense names deserve the same multiple.

Since the current P/E of 26.25x is almost exactly in line with the Fair Ratio of 26.25x, the shares screen as ABOUT RIGHT on this P/E view.

Result: ABOUT RIGHT

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.

Upgrade Your Decision Making: Choose your Huntington Ingalls Industries Narrative

Earlier it was mentioned that there is an even better way to think about valuation. On Simply Wall St you can use Narratives, where you write a clear story about Huntington Ingalls Industries, link that story to specific assumptions for future revenue, earnings and margins, and see a Fair Value that you can compare with the current price to help guide your timing, with the models updating automatically as news or earnings arrive.

Each Narrative sits on the Community page and turns your view into numbers. You might build a more optimistic Huntington Ingalls Industries story that lines up with a Fair Value near US$465 based on stronger growth and margins. Another investor might take a more cautious view closer to US$292 or US$234 that leans on tighter budgets and execution risk. By seeing that spread, you can decide which assumptions feel closest to your own and how the current share price around US$403 fits against those different Fair Values.

For Huntington Ingalls Industries however we'll make it really easy for you with previews of two leading Huntington Ingalls Industries Narratives:

Fair value in this bullish Narrative: US$404.90

Gap to that fair value versus the last close of US$403.37: about 0.4% below the Narrative fair value, so this view treats the stock as slightly undervalued on its own terms.

Assumed revenue growth in this Narrative: 5.31% a year

• Focuses on supportive U.S. defense policy, multi year funding for key ship programs and a US$56.9b backlog that together support long term revenue visibility and cash flow stability.
• Assumes operational improvements, digital tools and tech partnerships help lift throughput and margins, with analysts looking for earnings of US$911.5m by about March 2029 if those assumptions hold.
• Sees the current price as broadly in line with analyst consensus fair value around US$404.90, while flagging contract timing, supply chain, labor costs and federal budget pressure as key risks that could break the story.

Fair value in this bearish Narrative: about US$309.83

Gap to that fair value versus the last close of US$403.37: roughly 30% above the Narrative fair value, so this view treats the stock as overvalued on its own terms.

Assumed revenue growth in this Narrative: 4.69% a year

• Highlights heavy dependence on U.S. Navy contracts, a concentrated book of large multi year programs and pressure from possible future defense budget constraints.
• Builds in more moderate revenue and margin assumptions out to around 2028, with a lower future P/E multiple than the current U.S. Aerospace & Defense industry level.
• Flags fiscal pressure, shifts toward autonomous systems, labor shortages and greater international self sufficiency in shipbuilding as factors that could limit how much investors are willing to pay for future earnings.

Do you think there's more to the story for Huntington Ingalls Industries? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.