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Heico Cp Cl (HEI.A)
NYSE:HEI.A
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Heico Cp Cl A
(NYSE:HEI.A)
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Rating:73Outperform
Price Target:
$282.00
▲(18.70% Upside)
Action:ReiteratedDate:02/26/26
The score is driven primarily by strong financial quality and a positive earnings call backdrop (growth, cash generation, record backlog, and accretive M&A). This is partially offset by a rich valuation (high P/E, minimal yield) and a mixed near-term technical picture (slightly negative momentum and trading below the 50DMA).
Positive Factors
Strong free cash flow generation
High and consistent free cash flow (TTM FCF ~$841M, ~92% cash conversion) provides durable internal funding for capex, dividends and accretive M&A, reduces reliance on external financing and supports capital allocation through cyclical aerospace demand.
High‑margin, recurring Flight Support business
The Flight Support aftermarket franchise delivers durable, high cash margins and recurring replacement demand versus OEM cycles. Its strong organic growth and >24% operating margins underpin steady cash generation and provide a resilient core while the company pursues M&A and scale.
Conservative balance sheet and equity base
A healthy equity base and materially improved reported leverage provide financial flexibility for acquisitions, dividend continuity and downside protection. Lower leverage reduces refinancing risk and supports durable strategic optionality across aerospace cycles.
Negative Factors
ETG margin compression and shipment volatility
ETG’s margins are exposed to product‑mix shifts and irregular space shipments, creating persistent quarterly volatility. If mix or timing issues recur, ETG profitability and predictability of consolidated margins could remain constrained despite backlog strength.
Acquisition amortization depressing reported margins
Material amortization from acquisitions meaningfully depresses GAAP margins and reported operating income. This structural accounting drag widens the gap between cash EBITA and GAAP metrics, complicating comparability and potentially inflating perceived dilution after sustained M&A activity.
Higher leverage and OCF timing distortions
M&A funding pushed leverage to ~1.8x LTM EBITDA, reducing cushion for large shocks and limiting optionality. Separate LCP distributions have also distorted operating cash flow timing, adding volatility to near-term cash metrics and complicating liquidity planning.
Heico Cp Cl A (HEI.A) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$41.19B
Dividend Yield0.1%
Average Volume (3M)257.77K
Price to Earnings (P/E)52.9
Beta (1Y)0.76
Revenue Growth16.26%
EPS Growth33.72%
CountryUS
Employees10,000
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)1.35
Shares Outstanding84,266,716
10 Day Avg. Volume249,962
30 Day Avg. Volume257,775
Financial Highlights & Ratios
PEG Ratio1.88
Price to Book (P/B)10.26
Price to Sales (P/S)9.85
P/FCF Ratio51.30
Enterprise Value/Market Cap1.16
Enterprise Value/Revenue10.29
Enterprise Value/Gross Profit33.82
Enterprise Value/Ebitda39.55
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)5.49
Revenue Forecast (FY)$4.99B
Heico Cp Cl A Business Overview & Revenue Model
Company DescriptionHEICO Corporation, through its subsidiaries, designs, manufactures, and sells aerospace, defense, and electronic related products and services in the United States and internationally. The company's Flight Support Group segment provides jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components. 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. Its Electronic Technologies Group segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and RFI shielding and suppression filters; high-speed interface products; high voltage interconnection devices; high voltage advanced power electronics; power conversion products; and underwater locator beacons and emergency locator transmission beacons. This segment also offers traveling wave tube amplifiers and microwave power modules; three-dimensional microelectronic and stacked memory products; harsh environment connectivity products and custom molded cable assemblies; radio frequency and microwave amplifiers, transmitters, and receivers; communications and electronic intercept receivers and tuners; self-sealing auxiliary fuel systems; active antenna systems; and nuclear radiation detectors. The company serves customers primarily in the aviation, defense, space, medical, telecommunications, and electronics industries. HEICO Corporation was incorporated in 1957 and is headquartered in Hollywood, Florida.
How the Company Makes MoneyHeico generates revenue primarily through the sale of its aerospace parts and electronic components, as well as through repair and maintenance services. The Flight Support Group, which is a major revenue driver, earns income by providing replacement parts and services to airlines and military organizations, often at a lower cost than original equipment manufacturers (OEMs). The Electronic Technologies Group generates revenue by selling high-performance electronic components to customers across various sectors including military, commercial aviation, and industrial markets. Significant partnerships with OEMs and defense contractors enhance Heico's market position and contribute to its revenue streams. Additionally, the company benefits from long-term contracts and a growing demand for aftermarket services, which are more profitable than initial equipment sales.
Heico Cp Cl A Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jun 02, 2026
Earnings Call Sentiment Positive
The call presented a largely positive picture: HEICO delivered record net income, solid top-line growth, expanded EBITDA, strong performance in the Flight Support Group, a record ETG backlog, robust organic growth (company-wide ~12% organic in key areas), and active strategic acquisitions expected to be accretive. Near-term challenges include ETG margin pressure driven by unfavorable mix and shipment timing, amortization drag from acquisitions, modest inflationary pressures in components, and a modest increase in leverage from recent deals. Management described the ETG margin weakness as mix/timing related and expects improvement through the year. Given the magnitude and number of material positive operating and financial metrics, supported by a healthy M&A pipeline and record backlog, the positives significantly outweigh the contained, largely temporary negatives.Q1-2026 Updates
Positive Updates
Record Net Income and EPS Growth
Consolidated net income rose 13% year-over-year to a record $190.2 million, or $1.35 per diluted share, compared to $168.0 million or $1.20 per diluted share in Q1 FY2025. Net income benefited from discrete tax benefits from stock option exercises ($21.8M net of NCI in Q1 FY26).
Top-Line and Operating Income Expansion
Consolidated net sales increased 14% year-over-year and consolidated operating income improved 15% versus the prior-year quarter, demonstrating broad revenue and profit growth across the company.
Strong EBITDA and Cash Generation
Consolidated EBITDA increased 14% to $312.0 million (from $273.9M). Cash flow from operations was $178.6 million in the quarter (noting non-cash-funded LCP distributions impacted operating cash flow timing).
Flight Support Group Outperformance
Flight Support Group net sales rose 15% to $820.0 million (from $713.2M), driven by 12% organic growth. Operating income increased 21% to $200.7 million and operating margin expanded to 24.5% (from 23.3%). FSG EBITA (cash margin before amortization) was ~27.1%, up ~110 basis points year-over-year.
Electronic Technologies Group Revenue Growth and Record Backlog
ETG net sales improved 12% to $370.7 million (from $330.3M), including 6% organic growth. The group reported a record backlog, signaling continued demand across aerospace, defense and space end markets despite quarter-to-quarter shipment variability.
Active, Strategic M&A to Support Growth
Management completed multiple acquisitions in the quarter: Axillon Aerospace’s Fuel Containment business (renamed Rockmart Fuel Containment) and EthosEnergy Group Limited (industrial and aeroderivative gas turbine repair solutions). Management also entered into an agreement to acquire 80% of another aviation/defense services company. Purchases were funded with cash, debt facility proceeds and a small portion of HEICO Class A shares; transactions are expected to be accretive within a year.
Disciplined Leverage and Dividend Continuity
Net debt-to-EBITDA was 1.79x (up from 1.6x on 10/31/25) following acquisition activity. Management reiterated disciplined capital allocation, flexible balance sheet (permanent debt <1x EBITDA), and paid a semiannual dividend of $0.12 per share — the 95th consecutive semiannual cash dividend since 1979.
Positive Market Tailwinds and Strong Pipeline
Management highlighted favorable end-market dynamics (defense, commercial aerospace, space, and growing demand for power generation tied to AI/LLM infrastructure), a robust M&A pipeline, and confidence in continued organic demand across businesses.
Negative Updates
ETG Operating Income and Margin Compression
Electronic Technologies Group operating income decreased to $73.2 million from $76.5 million (≈ -4.3% year-over-year). ETG operating margin fell to 19.8% from 23.1% (a ~330 basis-point decline) driven primarily by an unfavorable product mix and lower shipments of space products in the quarter.
Quarter-to-Quarter Shipment and Mix Volatility
Management noted uneven shipment schedules (particularly in ETG and space) created quarter variability in margins and results; space organic sales declined in the high single digits in Q1 versus prior-year quarter due to shipment timing, not weaker order volume.
Amortization Drag from Acquisition Intangibles
Acquisition-related intangible amortization reduced reported operating income: approximately 260 basis points of FSG operating income and over 410 basis points for ETG, materially compressing GAAP margins versus cash-based measures.
Increased Leverage from Acquisition Activity
Net debt-to-EBITDA increased to 1.79x (from 1.6x) as a result of recent acquisitions. While management describes the LTM leverage as comfortable and the balance sheet flexible, leverage rose due to M&A funding.
Operating Cash Flow Timing Distortion from LCP Distributions
Operating cash flow was negatively impacted (~$22.7 million in Q1) by a large distribution to a long-term team member under the HEICO Leadership Compensation Plan; another ~ $73 million distribution is expected later in the year—both are funded via corporate-owned life insurance and are cash-neutral economically but create timing effects in reported operating cash flow.
Input Cost Pressure in Microelectronics
Management acknowledged elevated inflation in certain microelectronics (e.g., memory) and other components. While they expect to largely pass costs to customers, there is a lag and it constitutes a modest headwind.
Higher Acquisition Valuations in the Market
Competitive M&A market has pushed multiples higher, requiring more diligence and confidence in future growth assumptions to secure accretive deals; management noted this increases the work needed to ensure attractive returns.
Company Guidance
Management's guidance was largely qualitative but contained several concrete datapoints: they expect continued sales momentum in both Flight Support and Electronic Technologies driven by organic demand plus acquisitions (recent deals include Rockmart, Ethos and an 80% acquisition expected to close in Q2 that management said should be accretive within a year); they reiterated that ETG margins should improve as the year progresses and called out an expected GAAP margin range for ETG of roughly 22–24% (about 26–28% on a cash/EBITA basis before acquisition amortization), while FSG continues to deliver strong cash margins (Q1 FSG net sales were $820M, +15% with 12% organic growth, operating margin 24.5% and EBITA ≈27.1%, +110bps year-over-year); Q1 company totals cited include consolidated net income $190.2M (+13%, $1.35/diluted share), consolidated EBITDA $312M (+14%), consolidated operating income and net sales up 15% and 14%, ETG net sales $370.7M (+12%, 6% organic) and ETG operating income $73.2M, backlog at a record level, operating cash flow $178.6M (impacted by a ~$22.7M LCP distribution with another ~$73M planned but fully funded and net cash neutral), and a flexible balance sheet with net debt/EBITDA ~1.79x; management did not provide a formal full‑year revenue or EPS target on the call.Heico Cp Cl A Financial Statement Overview
Summary
Strong profitability (~15% net margin), solid multi-year revenue/earnings expansion, and robust cash generation (TTM FCF ~$841M with ~92% cash conversion). Key watch items are recent margin compression and variability in reported debt/FCF growth.Income Statement
TTM (Trailing-Twelve-Months) revenue is ~$4.63B with net income of ~$713M, and profitability remains strong (about 15% net margin). The business has shown a solid multi-year expansion in revenue and earnings, supporting a durable operating profile. The main watch item is some recent margin compression versus prior annual periods (notably lower gross and EBIT margins in TTM), even as revenue growth remains positive.86
Very Positive
Balance Sheet
The balance sheet looks strong with healthy equity (~$5.05B) against ~$9.04B of assets and solid returns (about 17% return on equity in TTM). Leverage improved materially versus recent annual periods (debt-to-equity moved from ~0.51 in 2025 and ~0.62 in 2024 to 0.0 in TTM per the provided data), which significantly reduces financial risk. The key caveat is the sharp change in reported debt in TTM versus prior years, which may reflect reporting/classification differences and is worth monitoring for consistency.84
Very Positive
Cash Flow
Cash generation is strong: TTM operating cash flow is ~$910M and free cash flow is ~$841M. Cash conversion is healthy, with free cash flow running at ~92% of net income, indicating earnings are backed by real cash. The primary weakness is a modest TTM decline in free cash flow versus the prior annual period (negative free cash flow growth), suggesting near-term volatility even though absolute cash flow remains robust.82
Very Positive
| Breakdown | TTM | Oct 2025 | Oct 2024 | Oct 2023 | Oct 2022 | Oct 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.63B | 4.49B | 3.86B | 2.97B | 2.21B | 1.87B |
| Gross Profit | 1.41B | 1.79B | 1.61B | 1.25B | 938.82M | 796.30M |
| EBITDA | 1.21B | 1.22B | 1.00B | 756.77M | 592.71M | 486.24M |
| Net Income | 712.62M | 690.38M | 514.11M | 403.60M | 351.68M | 304.22M |
Balance Sheet | ||||||
| Total Assets | 9.04B | 8.50B | 7.59B | 7.20B | 4.10B | 3.50B |
| Cash, Cash Equivalents and Short-Term Investments | 260.97M | 217.78M | 162.10M | 171.05M | 139.50M | 108.30M |
| Total Debt | 0.00 | 2.19B | 2.25B | 2.50B | 304.93M | 250.37M |
| Total Liabilities | 3.53B | 4.12B | 3.90B | 4.00B | 1.12B | 948.88M |
| Stockholders Equity | 5.05B | 4.31B | 3.64B | 3.15B | 2.61B | 2.26B |
Cash Flow | ||||||
| Free Cash Flow | 840.78M | 861.38M | 614.11M | 399.30M | 435.87M | 407.90M |
| Operating Cash Flow | 909.83M | 934.27M | 672.37M | 448.74M | 467.86M | 444.08M |
| Investing Cash Flow | -890.66M | -731.69M | -293.20M | -2.48B | -395.83M | -183.45M |
| Financing Cash Flow | 68.19M | -150.68M | -389.39M | 2.07B | -33.83M | -558.97M |
Heico Cp Cl A Technical Analysis
Neutral
237.58
Price Trends
258.07
Negative
251.83
Positive
247.77
Positive
Market Momentum
-0.30
Negative
45.18
Neutral
57.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HEI.A, the sentiment is Neutral. The current price of 237.58 is below the 20-day moving average (MA) of 253.96, below the 50-day MA of 258.07, and below the 200-day MA of 247.77, indicating a neutral trend. The MACD of -0.30 indicates Negative momentum. The RSI at 45.18 is Neutral, neither overbought nor oversold. The STOCH value of 57.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HEI.A.
Heico Cp Cl A Risk Analysis
Heico Cp Cl A disclosed 20 risk factors in its most recent earnings report. Heico Cp Cl A reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Heico Cp Cl A Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $23.53B | 49.71 | 20.38% | 0.35% | 7.30% | 19.54% | |
75 Outperform | $66.17B | 41.56 | 8.20% | 1.61% | 2.83% | 47.00% | |
74 Outperform | $41.19B | 71.50 | 17.39% | 0.07% | 16.26% | 33.72% | |
73 Outperform | $41.19B | 52.89 | 17.39% | 0.10% | 16.26% | 33.72% | |
72 Outperform | $26.27B | 55.37 | 19.43% | 0.16% | 9.51% | 16.03% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
55 Neutral | $5.33B | -172.79 | -2.08% | ― | 8.63% | 72.72% |
* Industrials Sector Average
HEI.A
Heico Cp Cl A
252.98
45.61
22.00%
CW
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698.72
383.54
121.69%
LHX
L3Harris Technologies
341.05
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68.94%
HEI
HEICO
344.72
85.89
33.18%
MRCY
Mercury Systems
89.30
45.95
106.00%
WWD
Woodward
393.58
209.65
113.98%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.