HII's Q1 showed strong top-line growth but margin compression and negative free cash flow persist. The reaffirmed FY26 guidance and $54B backlog provide a stable floor. Monitor cash flow trajectory and margin improvement in subsequent quarters; the stock may trade range-bound until free cash flow turns positive.
Price Chart
Executive Summary
HII reported Q1 2026 EPS of $3.79, in line with the year-ago quarter and slightly above the $3.73 consensus estimate. Revenue grew 13.4% YoY to $3.1B, driven by strong shipbuilding volumes, but operating margin contracted 89 bps to 5.0% and free cash flow was deeply negative at -$461M. The company reaffirmed its FY26 guidance, including shipbuilding revenue of $9.7B-$9.9B and free cash flow of $500M-$600M, providing a steady outlook for a defense contractor with a $54B backlog.
Key Financial Metrics
Key Facts
- Q1 2026 EPS $3.79 vs consensus $3.73 (beat by 1.6%, effectively in line)
- Revenue $3.1B, up 13.4% YoY from $2.73B, driven by Newport News (+19.3%) and Ingalls (+13.8%)
- Operating margin fell to 5.0% from 5.9% YoY; segment operating margin fell to 5.6% from 6.3%
- Free cash flow was -$461M, essentially unchanged from -$462M in Q1 2025
- Backlog grew to $54.0B; new contract awards of $4.0B in the quarter
- FY26 guidance reaffirmed: shipbuilding revenue $9.7B-$9.9B, free cash flow $500M-$600M
- Net cash used in operating activities was $390M vs $395M in prior year
Financial Impact
Revenue beat by ~$80M (2.6%) vs consensus $3.02B; EPS in line; no guidance change
Risk Factors
- Operating margin contraction could persist if cost pressures continue
- Negative free cash flow in Q1 is typical but large negative balance limits financial flexibility
- Dependence on U.S. government appropriations and potential budget disruptions
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 1 press release from GlobeNewswire.
| Document | Accession Number |
|---|---|
| PRESS-RELEASE Data (Synthetic) | press-3287526 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 11, 2026 21d ago | Press Release | $279.69 $272.86 | ▼ −2.44% | ▼ −2.22% | $268.61 (−3.96%) |
Aug 11, 2026 7w ago | Press Release | $327.85 $317.61 | ▼ −3.12% | ▼ −2.72% | $268.61 (−18.07%) |
Aug 11, 2026 7w ago | Insider Cluster | $327.85 $317.61 | ▼ −3.12% | ▼ −2.72% | $268.61 (−18.07%) |
Aug 10, 2026 7w ago | 144 | $330.81 $318.34 | ▼ −3.77% | ▼ −3.72% | $268.61 (−18.80%) |
Aug 5, 2026 8w ago | Press Release | $317.70 $326.80 | ▲ +2.86% | ▲ +2.51% | $268.61 (−15.45%) |
Aug 3, 2026 8w ago | Press Release | $325.95 $330.67 | ▲ +1.45% | ▼ −0.58% | $268.61 (−17.59%) |
Jul 30, 2026 9w ago | 8-K | $319.90 $321.76 | ▲ +0.58% | ▼ −3.04% | $268.61 (−16.03%) |
Jul 29, 2026 9w ago | Press Release | $319.90 $321.76 | ▲ +0.58% | ▼ −3.04% | $268.61 (−16.03%) |
Jul 10, 2026 12w ago | Press Release | $286.09 $271.05 | ▼ −5.26% | ▼ −4.70% | $268.61 (−6.11%) |
Jul 9, 2026 12w ago | GOVT-CONTRACT | $286.21 $271.05 | ▼ −5.30% | ▼ −5.17% | $268.61 (−6.15%) |
US Market Status
Subscribe to SecBot
Get Real-Time SEC Filing Intelligence
Comprehensive SEC filing analysis delivered the moment filings hit EDGAR. Sentiment scoring, impact analysis, and actionable insights for every material event.
Try SecBot Free Coming soon: SecBot Pro with alerts, watchlists, and API access