Huntington Ingalls Industries Inc.’s HII business unit, Mission Technologies, recently secured a $458 million deal to modernize communications and information technology (IT) networks for the U.S. government. The contract was provided by the U.S. Department of Defense (DoD) and has a five-year term.

A Brief Note on HII’s New Deal
 

Per the terms of the deal, HII will create, evaluate and put into practice cutting-edge technological solutions to strengthen system defenses against possible cyberattacks, provide new features and facilitate cloud migration. The improvements will give end users, which include the U.S. DoD and the U.S. Special Operations Command, access to IT services and solutions to support warfighters.

HII will employ model-based systems engineering to concentrate on communication hardware prototyping, waveform creation, mobile ad hoc network aerial relay solutions, payloads and deployable communication kits as part of the communications and IT modernization project. Along with developing skills to modernize communications and data analytics at the tactical edge, the team will assist in spectrum and bandwidth management.

HII’s Growth Prospects
 

Rising global security challenges and technological advancements are driving the C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance) industry, which is expected to grow significantly in the coming years. As countries prioritize modernizing their defense systems, demand for integrated C5ISR solutions is increasing significantly.

This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 3% for the global C5ISR market during the 2024-2029 period. This growth prospect is anticipated to bode well for Huntington Ingalls, a prominent forerunner in C5ISR technologies and supporter of military operations worldwide.

HII’s Mission Technologies unit’s capabilities include C5ISR systems and operations. It creates, develops, integrates and manages the sensors, systems and other assets required for integrated ISR operations and rapid decision-making.

Opportunities for HII’s Peers
 

Other defense companies that are likely to enjoy the perks of the expanding C5ISR market have been discussed below.

BAE Systems BAESY: The company provides expert systems engineering, integration and sustainment services for C5ISR systems, as well as enterprise information technology, to improve mission effectiveness. The company's technologies are used in the Army, Navy and federal civilian agency systems and networks in the land, air, sea and cyber domains.

BAE Systems boasts a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for BAESY’s 2024 sales implies an improvement of 37.4% from the previous year’s level.

Kratos Defense & Security Solutions, Inc. KTOS: The company has more than 50 years of expertise in supplying extremely complex solutions for C5ISR applications. Kratos is a leading provider in the packaging and integration of electronics and other sensitive C5ISR equipment.

Kratos delivered an average earnings surprise of 73.75% in the last four quarters. The Zacks Consensus Estimate for KTOS’ 2024 sales implies an improvement of 10.8% from the previous year’s level.

Airbus Group EADSY: The company offers the most comprehensive C5ISR portfolio and accompanying services. Its solutions provide a complete situational awareness picture across various domains, assisting decision-makers at the strategic, operational and tactical levels across land, air, sea, joint and intelligence domains.

EADSY boasts a long-term earnings growth rate of 11.4%. The Zacks Consensus Estimate for Airbus’ 2024 sales implies an improvement of 5.4% from the previous year’s level.

HII Stock Outperforms Industry
 

In the past year, HII shares have risen 29.7% compared with the industry’s 18.8% growth.

Image Source: Zacks Investment Research

HII’s Zacks Rank
 

Huntington Ingalls currently has a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Bae Systems PLC (BAESY) : Free Stock Analysis Report

Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report

Airbus Group (EADSY) : Free Stock Analysis Report

Kratos Defense & Security Solutions, Inc. (KTOS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research