Huntington Ingalls Industries stock is currently being favored over BWX Technologies stock in the military shipbuilding industry. This preference is due in part to Huntington Ingalls’ lower revenue multiple compared to BWX Technologies. Although BWX Technologies has seen better stock performance over the past three years, Huntington Ingalls is expected to outperform in the next three years. The comparison includes factors such as historical revenue growth, returns, and valuation in an interactive dashboard analysis.
Huntington Ingalls has seen better revenue growth over the past three years, with an average annual rate of 7% compared to 6% for BWX Technologies. BWX Technologies derives around 80% of its revenue from government contracts, including designing and manufacturing nuclear components for the U.S. Navy and Department of Energy. On the other hand, Huntington Ingalls’ revenue growth can be attributed to higher volumes for various segments. Both companies are expected to see mid-single-digit revenue growth in the next three years.
Profitability and financial position also play a role in the comparison between the two companies. BWX Technologies is more profitable with a higher operating margin, while also having a better financial position with lower debt and higher cash reserves. Huntington Ingalls has faced challenges with its operating margin declining in recent years due to labor retention issues and program delays.
Although Huntington Ingalls has demonstrated better revenue growth, BWX Technologies is more profitable and has a better financial position. However, with its attractive valuation, Huntington Ingalls is seen as the better choice of the two. Huntington Ingalls stock is trading at a lower revenue multiple compared to its historical average, while BWX Technologies is trading at a higher multiple. The gap in P/S multiple is expected to narrow in favor of Huntington Ingalls, making it a potentially more appealing investment.
Overall, while BWX Technologies may have some advantages in terms of profitability and financial position, Huntington Ingalls is favored for its attractive valuation and expected outperformance in the next three years. Investors are encouraged to consider these factors when making investment decisions in the military shipbuilding industry.
