Is Huntington Ingalls Industries (HII) Stock Undervalued Right Now?

Zacks Equity Research
·3-min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Huntington Ingalls Industries (HII). HII is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 13.73, while its industry has an average P/E of 18.24. Over the last 12 months, HII's Forward P/E has been as high as 17.82 and as low as 12.54, with a median of 14.71.

Another valuation metric that we should highlight is HII's P/B ratio of 2.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. HII's current P/B looks attractive when compared to its industry's average P/B of 3.87. Over the past 12 months, HII's P/B has been as high as 2.87 and as low as 2.13, with a median of 2.48.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HII has a P/S ratio of 0.82. This compares to its industry's average P/S of 1.84.

Finally, our model also underscores that HII has a P/CF ratio of 9.12. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. HII's current P/CF looks attractive when compared to its industry's average P/CF of 22.72. Over the past 52 weeks, HII's P/CF has been as high as 11.64 and as low as 8.95, with a median of 10.15.

These are only a few of the key metrics included in Huntington Ingalls Industries's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, HII looks like an impressive value stock at the moment.

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