If you have been keeping an eye on Huntington Ingalls Industries (HII) lately, you might be wondering what is driving investor debate right now. The latest move in shares was not triggered by a single major headline or event, but for anyone following defense stocks, that in itself can be a signal. Is this a pause before growth, or is the market signaling uncertainty about future performance? Taking a step back, the bigger picture shows Huntington Ingalls Industries has seen its stock return around 5% over the past year and an impressive 18% gain in the past 3 months. Those figures outpace the sector’s recent average, but the momentum has cooled over the past week. With annual revenue and net income growth both north of 4% and 13% respectively, there is evidence of steady progress even if the market seems to be taking a breather. With this kind of mixed momentum, the real question for investors is whether the current share price reflects all the company’s potential or if there is still some upside the market is missing. Is now a buying window, or are future gains already priced in?

Most Popular Narrative: 6.6% Undervalued

The most widely followed narrative currently values Huntington Ingalls Industries as moderately undervalued, reflecting strong projections for future earnings and robust defense sector tailwinds.

Sustained increases in U.S. defense budgets and policy tailwinds, as evidenced by multi-year funding allocations in the FY26 budget (including support for Columbia-class, Virginia-class, and amphibious ship programs) and the reconciliation bill's directed industrial base investments, ensure robust multi-year order flow and underpin long-term revenue growth and backlog visibility.

Curious what’s fueling this bullish fair value? It is not just traditional shipbuilding revenue. The narrative leans on remarkable operational targets, margin boosts, and a future earnings multiple you might not expect from the sector. Think you know the numbers? Dive into the full narrative for the valuation formula the pros are betting on.

Result: Fair Value of $285.80 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, supply chain disruptions or delays in large defense contracts could quickly erode today’s optimism and shift analyst sentiment in the other direction.

Find out about the key risks to this Huntington Ingalls Industries narrative.

Another View: SWS DCF Model Suggests Undervaluation Persists

Taking a step away from analyst targets, our DCF model also points to Huntington Ingalls Industries being undervalued at current levels. Can both the market and the math really agree? Or is something missing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out Huntington Ingalls Industries for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Huntington Ingalls Industries Narrative

If you are looking to dig deeper or form your own perspective, you can quickly build your own narrative using the data at hand. Do it your way

A great starting point for your Huntington Ingalls Industries research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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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.