Huntington Ingalls: Shares of Long-Cycle Boat Builder Are Undervalued Despite Short-Term Choppiness

Wide-moat Huntington Ingalls’ shares are trading 20% below our $317 fair value estimate. While shipbuilding doesn't offer the juiciest margins in the defense industry, it represents the quintessential set of conditions we see as providing durable competitive advantage and decades of visibility into revenue and profitability. The firm's quarterly revenue and profits can be lumpy, but we believe long-term investors will be rewarded in the wake of growing submarine and destroyer revenue.