Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Huntington Ingalls Industries (NYSE: HII) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- Compared to its closing price of one year ago, HII's share price has jumped by 38.43%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HII should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- HUNTINGTON INGALLS IND INC's earnings per share declined by 29.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HUNTINGTON INGALLS IND INC turned its bottom line around by earning $2.91 versus -$1.96 in the prior year. This year, the market expects an improvement in earnings ($3.86 versus $2.91).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, HUNTINGTON INGALLS IND INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for HUNTINGTON INGALLS IND INC is rather low; currently it is at 20.90%. Regardless of HII's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.74% trails the industry average.
-- Written by a member of TheStreet Ratings Staff