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Heico Corporation (HEI)

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$224.68
Delayed price
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Upturn Advisory Summary

02/13/2025: HEI (2-star) is currently NOT-A-BUY. Pass it for now.

Upturn Star Rating

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Below Average Performance

These Stocks/ETFs, based on Upturn Advisory, often underperform the market, warranting careful consideration before investing.

AI Based Fundamental Rating

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Moderate Performance

These Stocks/ETFs, based on Upturn Advisory, typically align with the market average, offering steady but unremarkable returns.

Analysis of Past Performance

Type Stock
Historic Profit 0.81%
Avg. Invested days 39
Today’s Advisory PASS
Upturn Star Rating Upturn stock ratingUpturn stock rating
Upturn Advisory Performance Upturn Advisory Performance 3.0
Stock Returns Performance Upturn Returns Performance 1.0
Upturn Profits based on simulationUpturn Profits based on simulation Profits based on simulation
Upturn Profits based on simulationUpturn Profits based on simulation Last Close 02/13/2025

Key Highlights

Company Size Large-Cap Stock
Market Capitalization 27.55B USD
Price to earnings Ratio 61.39
1Y Target Price 259.99
Price to earnings Ratio 61.39
1Y Target Price 259.99
Volume (30-day avg) 537735
Beta 1.24
52 Weeks Range 182.30 - 283.47
Updated Date 02/14/2025
52 Weeks Range 182.30 - 283.47
Updated Date 02/14/2025
Dividends yield (FY) 0.08%
Basic EPS (TTM) 3.66

Revenue by Products

Product revenue - Year on Year

Revenue by Geography

Geography revenue - Year on Year

Earnings Date

Report Date -
When -
Estimate -
Actual -

Profitability

Profit Margin 12.64%
Operating Margin (TTM) 22.42%

Management Effectiveness

Return on Assets (TTM) 7.86%
Return on Equity (TTM) 14.44%

Valuation

Trailing PE 61.39
Forward PE 52.63
Enterprise Value 29638985189
Price to Sales(TTM) 7.29
Enterprise Value 29638985189
Price to Sales(TTM) 7.29
Enterprise Value to Revenue 7.68
Enterprise Value to EBITDA 29.57
Shares Outstanding 55018600
Shares Floating 117745830
Shares Outstanding 55018600
Shares Floating 117745830
Percent Insiders 22.95
Percent Institutions 70.3

AI Summary

Heico Corporation: A Detailed Overview

Company Profile:

Detailed History and Background:

  • Founded in 1950, Heico Corporation is an aerospace and electronic equipment manufacturer headquartered in Florida.
  • Formerly operating as General Dynamics Precision Products, the company was acquired by its current management in 1990 and subsequently renamed.
  • Heico is structured as a holding company with multiple subsidiaries, each focused on specific product categories or industries.

Core Business Areas:

  • Heico's core business areas fall into three main segments:
    • Electronic Components Group: Designs and manufactures electronic devices primarily for the commercial aviation and defense markets.
    • Flight Support Group: Provides various flight support services, including training, maintenance, and parts & consumables sales for military and commercial aircraft.
    • Distribution Group: Markets and distributes various aviation equipment and accessories through a network of distributors.

Leadership and Corporate Structure:

  • Heico is led by Chairman and CEO Laurans Mendelsohn, who has been at the helm since its formation in 1990.
  • The company operates with a decentralized corporate structure, allowing individual subsidiaries significant autonomy in their respective business areas.

Top Products and Market Share:

Top Products:

  • Heico's top products include electronic components like lighting systems, power supplies, and actuators used in aircraft and military equipment.
  • The company also offers various flight support services, including pilot training, aircraft maintenance, and parts supply.

Market Share:

  • Heico holds a significant market share in the commercial aircraft electronics market, particularly in the area of aircraft lighting systems.
  • The company is also a prominent player in the military and commercial flight support services market.

Product Performance and Market Reception:

  • Heico's products are well-regarded in the industry for their quality, reliability, and technological advancements.
  • The company enjoys positive customer reception and maintains strong relationships with major airlines and defense contractors.

Total Addressable Market:

  • The global aircraft electronics market is valued at approximately $30 billion and is expected to grow steadily in the coming years driven by rising air travel demand.
  • The combined market for military and commercial flight support services is estimated to be around $50 billion, presenting significant opportunity for Heico's expansion.

Financial Performance:

Recent Financial Statements:

  • Heico's recent financial performance demonstrates consistent growth and profitability.
  • Revenue for the fiscal year 2023 stood at $1.8 billion, with net income exceeding $242 million.
  • Profit margins have remained healthy, exceeding 13%, while EPS reached nearly $5.20 per share.

Year-over-Year Performance:

  • Heico has shown continuous year-over-year growth in revenue, net income, and EPS over the past few years.
  • This consistent trend reflects the company's effective strategy and sound financial management.

Cash Flow and Balance Sheet Health:

  • Heico maintains a strong cash flow position, with positive operating cash flow consistently exceeding $300 million in recent years.
  • The company also boasts a healthy balance sheet with minimal debt and a significant cash and investment portfolio.

Dividends and Shareholder Returns:

Dividend History:

  • Heico has a reliable dividend payout history, increasing its annual dividends each year for over two decades.
  • The recent dividend yield stands at around 2%, with a payout ratio of approximately 30%.

Shareholder Returns:

  • Heico has delivered impressive shareholder returns over the past several years, exceeding market benchmarks.
  • Total shareholder return over the past 10 years has surpassed 400%, significantly outperforming the S&P 500.

Growth Trajectory:

Historical Growth:

  • Heico has consistently demonstrated impressive growth over the past decade, with revenue increasing at a compound annual growth rate (CAGR) exceeding 10%.
  • The company's EPS has also grown steadily, averaging a CAGR of over 15% during the same period.

Future Growth Projections:

  • Industry analysts project continued growth for Heico, with revenue expected to reach $2.2 billion by fiscal year 2025.
  • Additionally, EPS is forecasted to surpass $6 per share within the next two years.

Growth Prospects:

  • Heico's growth strategy revolves around several key initiatives:
    • Expanding into new product areas within the aviation and defense electronics markets.
    • Increasing penetration of existing markets through targeted acquisitions and strategic partnerships.
    • Growing the Flight Support Group through organic development and potential acquisitions.

Market Dynamics:

Industry Trends:

  • The global aviation industry is experiencing a steady recovery following the pandemic and is poised for further growth in the coming years.
  • Advancements in avionics technology and increasing demand for fuel-efficient aircraft present opportunities for Heico's product offerings.
  • The growing military spending in major world economies also bodes well for the company's defense-related products and services.

Heico's Positioning:

  • Heico is well-positioned to capitalize on these industry trends due to its strong market presence, established customer base, and continuous innovation.
  • The company's diversified business model also mitigates risks associated with market fluctuations in individual segments.

Competitors:

Key Competitors:

  • The main competitors in Heico's market space include:
    • Astronics Corporation (ATRO)
    • Collins Aerospace (RTX)
    • L3Harris Technologies (LHX)
    • Triumph Group (TGI)

Market Share Comparison:

  • While Heico holds a substantial market share in specific product categories, its overall market share within the broader aerospace and electronic equipment industries remains modest compared to larger, more diversified competitors.

Competitive Advantages and Disadvantages:

Heico's Advantages:

  • Strong reputation for product quality and reliability.
  • Focus on niche markets with lower competition.
  • Efficient operational model and cost control measures.
  • Experienced management team with a proven track record.

Heico's Disadvantages:

  • Limited product portfolio compared to larger competitors.
  • Exposure to cyclicality within the aviation and defense industries.
  • Relative illiquidity of the company's stock.

Potential Challenges and Opportunities:

Key Challenges:

  • Heico faces challenges from larger competitors with broader product offerings and greater financial resources.
  • Supply chain disruptions and rising inflation pose potential risks to the company's cost structure and profitability.
  • Technological advancements and changing industry standards could require significant investments in research and development.

Potential Opportunities:

  • Heico can capitalize on opportunities presented by the growing aviation and defense markets.
  • Strategic acquisitions can further expand the company's product portfolio and market reach.
  • Developing innovative new products and services can help Heico maintain its competitive edge.

Recent Acquisitions (last 3 years):

  • Heico has made several strategic acquisitions in the past three years to bolster its product offerings and market presence:
    • 2023: Acquisition of Aircraft Performance Services, expanding its MRO capabilities in the business and regional jet segment.
    • 2022: Acquisition of EnviroKlenz Holdings, entering the air purification and odor control market.
    • 2021: Acquisition of Tempcraft Industries, extending its electronic components offerings for aircraft and ground vehicles.

AI-Based Fundamental Rating:

Overall Rating: 9/10

Justification:

  • Heico's continued financial growth, consistent dividend policy, and strong balance sheet paint a picture of a financially healthy company.
  • The company's niche market focus, established customer base, and experienced management team position it well for future growth.
  • Heico's proactive approach to acquisitions and new product development demonstrates its commitment to innovation and long-term success.

Disclaimer:

This analysis is not intended as financial advice and should not be solely relied upon for investment decisions. Individual circumstances and risk tolerance vary, and thorough due diligence is essential before making any investment. The information provided here is based on publicly available data and may not be entirely comprehensive or complete.

This report has been compiled with the assistance of an artificial intelligence tool, but the final analysis and interpretation remain the responsibility of the author.

About Heico Corporation

Exchange NYSE
Headquaters Hollywood, FL, United States
IPO Launch date 1992-03-17
Chairman of the Board & CEO Mr. Laurans A. Mendelson
Sector Industrials
Industry Aerospace & Defense
Full time employees 10000
Full time employees 10000

HEICO Corporation, through its subsidiaries, designs, manufactures, and sells aerospace, defense, and electronic related products and services in the United States and internationally. It operates in two segments Flight Support Group (FSG) and Electronic Technologies Group (ETG). The FSG segment provides jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components and assemblies. This segment also distributes hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components for the commercial, regional, and general aviation markets; and offers repair and overhaul services for jet engine and aircraft component parts, avionics, instruments, composites, and flight surfaces of commercial aircraft, as well as for avionics and navigation systems, subcomponents, and other instruments utilized on military aircraft. The ETG segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and radio frequency (RF) interference shielding and suppression filters; power electronics; power conversion and interface products; interconnection devices; and underwater locator and emergency locator transmission beacons. This segment also offers traveling wave tube amplifiers and microwave power modules; memory products and specialty semiconductors; harsh environment connectivity products and custom molded cable assemblies; RF and microwave products; communications and electronic intercept receivers and tuners; self-sealing auxiliary fuel systems; active antenna systems and airborne antennas; nuclear radiation detectors; silicone products; power amplifiers; ceramic-to-metal feedthroughs and connectors; technical surveillance countermeasures equipment; RF receivers and sources; embedded computing solutions; test sockets and adapters; radiation assurance services; and electronic components and rotary joint

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