HEICO has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 9.3% to $360 per share while the index has gained 9.3%.
Is HEI a buy right now? Find out in our full research report, it’s free.
Why Are We Positive on HEICO?
Founded in 1957, HEICO (NYSE: HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, HEICO’s sales grew at an incredible 23.7% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
HEICO’s astounding 24.5% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
HEICO has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 17.4% over the last five years.
Final Judgment
These are just a few reasons why we’re bullish on HEICO, but at $360 per share (or 55.9× forward P/E), is now the right time to buy the stock? See for yourself in our full research report, it’s free.
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