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Heico Corp HEI

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Stock XNYS Rating as of
$265.63 +3.35 (1.28%)
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As of Delayed Price Closed

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Heico Earnings: Flight Support Overdelivers, Slower Electronic Segment; Fair Value Estimate Intact

Nicolas Owens

Heico's third-quarter 2024 operating margins came within a hair's breadth of our overall expectations, though the flight support group segment delivered $80 million more revenue and $30 million more operating profit than we anticipated. That outperformance was more or less offset in the quarter by slower growth in the electronic technologies group. We reined in our medium-term profit growth forecast for the electronic technologies segment, which offset the time value of money and left our fair value estimate at $173. We see the shares as overvalued by the market.

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Price vs Fair Value

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HEI is trading at a 197% premium.
Price
$265.63
Fair Value
$173.00
Uncertainty
Medium
1-Star Price
$165.67
5-Star Price
$157.70
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Heico independently develops replacement parts for highly complex aircraft components—the juiciest market segment in aerospace, with a fraction of the required R&D as OEMs.

Bears

Private equity firms have entered the defense supplier market and may push up prices for target companies, which would limit Heico's ability to generate value-accretive inorganic growth.

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News

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Trading Information

Previous Close Price
$262.28
Day Range
$262.28–266.66
52-Week Range
$155.42–269.38
Bid/Ask
$260.01 / $267.19
Market Cap
$36.82 Bil
Volume/Avg
330,446 / 378,041

Key Statistics

Price/Earnings (Normalized)
75.68
Price/Sales
9.84
Dividend Yield (Trailing)
0.08%
Dividend Yield (Forward)
0.08%
Total Yield
0.08%

Company Profile

Heico is an aerospace and defense supplier that focuses on creating niche replacement parts for commercial aircraft and components for defense products. In commercial aerospace, Heico is the largest independent producer of replacement aircraft parts. In the defense market, the company produces niche subcomponents used in targeting technology as well as simulation equipment, among other categories. It operates as two segments: the flight support group,or FSG, and the electronic technologies group, or ETG, both of which supply the aerospace and defense sectors to different degrees. The company is persistently acquisitive, focusing on companies in similar or adjacent markets that are generating strong cash flow with the potential for growth.
Sector
Industrials
Industry
Aerospace & Defense
Stock Style Box
Mid Growth
Total Number of Employees
9,600
Website
https://www.heico.com

Competitors

Valuation

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Metric
HEI
BA
TDG
Price/Earnings (Normalized)
 75.68—44.83
Price/Book Value
 10.40——
Price/Sales
 9.841.2710.95
Price/Cash Flow
 50.20189.5637.58
Price/Earnings
HEI
BA
TDG

Financial Strength

Metric
HEI
BA
TDG
Quick Ratio
 1.360.262.52
Current Ratio
 3.301.183.81
Interest Coverage
 5.07−0.232.75
Quick Ratio
HEI
BA
TDG

Profitability

Metric
HEI
BA
TDG
Return on Assets (Normalized)
 7.73%−2.20%8.96%
Return on Equity (Normalized)
 16.53%——
Return on Invested Capital (Normalized)
 11.42%−3.04%15.20%
Return on Assets
HEI
BA
TDG

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