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Huntington Ingalls (HII) Wins $189M Deal for USS Columbus
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Huntington Ingalls Industries, Inc.’s (HII - Free Report) business unit, Newport News, clinched a modification contract involving USS Columbus upgrade. The work related to the contract will be executed in Newport News, VA.
Details of the Deal
Valued at $188.9 million, the modification contract comprises maintenance, upgrade and modernization efforts of the USS Columbus SSN 762. The deal, which has been awarded by the Supervisor of Shipbuilding, Conversion and Repair, USN, Newport News, VA, is expected to conclude in December 2022.
Importance of USS Columbus SSN 762
USS COLUMBUS is a submarine of the LOS ANGELES 688 Improved Class and is one of the most advanced undersea vessels in the world. The COLUMBUS is the 51st 688 and the 12th improved version of this class, which includes a vertical launch system for Tomahawk cruise missiles and an improved hull design for under-ice operations.
Huntington Ingalls’Position in Submarine Industry
Huntington Ingalls’ business unit enjoys a dominant position in the submarine building market, backed by its expertise in designing and manufacturing nuclear-powered submarines for the U.S. Navy.
Its continuous efforts to upgrade and modernize submarines have resulted in multiple contracts wins, which should boost its overall growth. HII’s Newport News unit, in collaboration with General Dynamics' Electric Boat, builds Virginia Class (SSN 774) Submarines for the U.S. Army. As of Dec 31, 2020, the company delivered four submarines of the first block and six submarines of the second block of Virginia class (SSN 774) submarines.
Moreover, Newport News is also participating in the designing and construction of the Columbia class (SSBN 826) submarine and currently anticipates 12 new ballistic missile submarines to be launched.
Apart from building Columbia and Virginia-class submarines, Huntington Ingalls offers submarine modernization and repair services at naval shipyards. This, in turn, has resulted in huge contract inflows for submarines maintenance and repair for Huntington Ingalls. The latest contract win is a testament to that.
Global Growth Prospects
As nations increase their defense spending on military arsenals amid the rising geopolitical tension, demand for submarines is likely to grow as countries look to improve their underwater capabilities. In this context, per the report from Mordor Intelligence, the submarine market is anticipated to witness a CAGR of more than 4% over the 2022-2027 period.
Such strong growth trends indicate ample growth opportunities for HII. Other defense majors who are likely to benefit from this growth trend are BAE Systems (BAESY - Free Report) , General Dynamics (GD - Free Report) and Northrop Grumman (NOC - Free Report) .
BAE Systems’ Astute class submarines are the U.K.’s largest and most powerful attack submarines and can strike targets up to 621 miles from the coast with pinpoint accuracy.
The long-term earnings growth rate for BAE Systemsis pegged at 3.9%. Shares of BAESY have appreciated 25.2% in the past year.
General Dynamics is one of the two defense contractors worldwide that is equipped to build stealth missile submarines.
General Dynamics boasts a long-term earnings growth rate of 9.6%. Shares of GD have surged 30.1% in the past year.
Northrop Grumman designs, develops and produces communication systems, sensors, signal processing and electronic warfare systems to counter the increasingly sophisticated sea-based threats. Northrop Grumman also provides launch systems for submarines and its eject launch technology has powered more than 7,000 successful launches.
Northrop Grumman has a long-term earnings growth rate of 6.2%. Shares of NOC have increased 33.9% in the past year.
Price Movement
In a year, shares of Huntington Ingalls have rallied 1.5% against the industry’s decline of 32%.
Image: Bigstock
Huntington Ingalls (HII) Wins $189M Deal for USS Columbus
Huntington Ingalls Industries, Inc.’s (HII - Free Report) business unit, Newport News, clinched a modification contract involving USS Columbus upgrade. The work related to the contract will be executed in Newport News, VA.
Details of the Deal
Valued at $188.9 million, the modification contract comprises maintenance, upgrade and modernization efforts of the USS Columbus SSN 762. The deal, which has been awarded by the Supervisor of Shipbuilding, Conversion and Repair, USN, Newport News, VA, is expected to conclude in December 2022.
Importance of USS Columbus SSN 762
USS COLUMBUS is a submarine of the LOS ANGELES 688 Improved Class and is one of the most advanced undersea vessels in the world. The COLUMBUS is the 51st 688 and the 12th improved version of this class, which includes a vertical launch system for Tomahawk cruise missiles and an improved hull design for under-ice operations.
Huntington Ingalls’Position in Submarine Industry
Huntington Ingalls’ business unit enjoys a dominant position in the submarine building market, backed by its expertise in designing and manufacturing nuclear-powered submarines for the U.S. Navy.
Its continuous efforts to upgrade and modernize submarines have resulted in multiple contracts wins, which should boost its overall growth. HII’s Newport News unit, in collaboration with General Dynamics' Electric Boat, builds Virginia Class (SSN 774) Submarines for the U.S. Army. As of Dec 31, 2020, the company delivered four submarines of the first block and six submarines of the second block of Virginia class (SSN 774) submarines.
Moreover, Newport News is also participating in the designing and construction of the Columbia class (SSBN 826) submarine and currently anticipates 12 new ballistic missile submarines to be launched.
Apart from building Columbia and Virginia-class submarines, Huntington Ingalls offers submarine modernization and repair services at naval shipyards. This, in turn, has resulted in huge contract inflows for submarines maintenance and repair for Huntington Ingalls. The latest contract win is a testament to that.
Global Growth Prospects
As nations increase their defense spending on military arsenals amid the rising geopolitical tension, demand for submarines is likely to grow as countries look to improve their underwater capabilities. In this context, per the report from Mordor Intelligence, the submarine market is anticipated to witness a CAGR of more than 4% over the 2022-2027 period.
Such strong growth trends indicate ample growth opportunities for HII. Other defense majors who are likely to benefit from this growth trend are BAE Systems (BAESY - Free Report) , General Dynamics (GD - Free Report) and Northrop Grumman (NOC - Free Report) .
BAE Systems’ Astute class submarines are the U.K.’s largest and most powerful attack submarines and can strike targets up to 621 miles from the coast with pinpoint accuracy.
The long-term earnings growth rate for BAE Systemsis pegged at 3.9%. Shares of BAESY have appreciated 25.2% in the past year.
General Dynamics is one of the two defense contractors worldwide that is equipped to build stealth missile submarines.
General Dynamics boasts a long-term earnings growth rate of 9.6%. Shares of GD have surged 30.1% in the past year.
Northrop Grumman designs, develops and produces communication systems, sensors, signal processing and electronic warfare systems to counter the increasingly sophisticated sea-based threats. Northrop Grumman also provides launch systems for submarines and its eject launch technology has powered more than 7,000 successful launches.
Northrop Grumman has a long-term earnings growth rate of 6.2%. Shares of NOC have increased 33.9% in the past year.
Price Movement
In a year, shares of Huntington Ingalls have rallied 1.5% against the industry’s decline of 32%.
Image Source: Zacks Investment Research
Zacks Rank
Huntington Ingalls currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.