Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Huntington Ingalls Industries, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 3.5% to 5.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 70, DPO 23, DIO 7). At a 8.2% WACC with mid-year discounting, the terminal value (83% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $212.36 per share, suggesting HII is overvalued by 45.2% at the current price of $387.85.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 506 | 537 | 570 | 591 | 623 | 639 |
| (−) Net Interest | 113 | 120 | 128 | 132 | 139 | 143 |
| (+) D&A | 335 | 347 | 373 | 402 | 420 | 430 |
| EBITDA | 955 | 1,004 | 1,071 | 1,126 | 1,183 | 1,212 |
| (−) Tax | 90 | 95 | 101 | 105 | 111 | — |
| (−) CapEx | 390 | 413 | 439 | 455 | 480 | — |
| (−) ΔWC | -57 | 121 | 131 | 82 | 126 | — |
| Free Cash Flow (FCF) | 532 | 375 | 400 | 483 | 467 | — |
| Peers' EBITDA Multiple | 10.8x | |||||
| Terminal Value | 13,154 | |||||
| WACC / Discount Rate | 8.23% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 511 | 333 | 328 | 367 | 327 | 8,856 |
| Enterprise Value | 10,721 | |||||
| Projection Period | 1,865 | 17.4% | ||||
| Terminal Value | 8,856 | 82.6% | ||||
| (−) Current Net Debt | 2,372 | |||||
| Equity Value | 8,349 | |||||
| (÷) Outstanding Shares | 39M | |||||
| Fair Price | $212 | -45.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.8x | 8.8x | 10.8x | 12.8x | 14.8x |
|---|---|---|---|---|---|
| 6.2% | $145 | $191 | $236 | $282 | $328 |
| 7.2% | $137 | $181 | $224 | $268 | $311 |
| 8.2% | $129 | $171 | $212 | $254 | $295 |
| 9.2% | $122 | $162 | $201 | $241 | $281 |
| 10.2% | $115 | $153 | $191 | $229 | $267 |
Current price: $387.85. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.