News about shipbuilding

Huntington Ingalls shares surged 12.3% by 12:10 p.m. ET Thursday after the shipbuilder beat earnings projections. Q3 sales grew 11% to $3.5 billion, above expected sales below $3.4 billion, and earnings per share came in at $5.48 versus analysts' forecast of $4.36. Operating profit margin rose two full percentage points to 7%, and earnings grew 49%, while free cash flow reached $429 million versus $16 million a year earlier. The company forecasts roughly $13.7 billion in sales and about $550 million in free cash flow this year. The author notes the stock trades at about 20x expected free cash flow and a P/S of 0.8x, making it one of the cheaper defense stocks.

Huntington Ingalls announced on October 21, 2026, a quarterly dividend increase to $1.41 per share from $1.38, about 2.2%, extending its 14-year streak of annual raises. At the $275 share price, the annualized payout of $5.64 yields roughly 2.1%. Free cash flow rose to $800 million in fiscal 2025 from $40 million in 2024, and $213 million of dividends took about 27% of it. Backlog reached $57.3 billion, and the Pentagon's fiscal 2027 request seeks $87.2 billion for shipbuilding. Cash flow has been uneven, with operating cash flow negative in the first two quarters of 2026 and only $12 million in cash at the end of June, so the expected fourth-quarter cash generation is the key test.

Anduril announced that the U.S. Navy has awarded it a $2.9 billion contract to build components for the Virginia-class nuclear attack submarine fleet. To support this, the company plans to invest $3.7 billion in a new 2 million-square-foot "Arsenal 2" shipyard at Sparrows Point, outside Baltimore, making it a key supplier to incumbent primes Huntington Ingalls (HII) and General Dynamics (GD). The article argues Anduril is unlikely to replace these builders immediately, but it could become an indispensable part of the supply chain and later grow its own shipbuilding business. Anduril is also developing autonomous undersea vehicles such as Dive-LD and Dive-XL, and Arsenal 2 is not expected to begin operations before 2030.