S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
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A US appeals court ruling could allow mine development on Oak Flat, land sacred to Apaches
Peace, music and memories: As the 1960s fade, historians scramble to capture Woodstock's voices
Critical asset just had biggest fall on record (Ad)
In Senegal's capital, Nicaragua is a hot ticket among travel agents as migrants try to reach US
California authorizes expansion of Waymo's driverless car services to LA, SF peninsula
Critical asset just had biggest fall on record (Ad)
Norway's hospitalized king gets a pacemaker in Malaysia after falling ill during vacation
College athletes will need school approval for NIL deals under bill passed by Utah Legislature
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
A US appeals court ruling could allow mine development on Oak Flat, land sacred to Apaches
Peace, music and memories: As the 1960s fade, historians scramble to capture Woodstock's voices
Critical asset just had biggest fall on record (Ad)
In Senegal's capital, Nicaragua is a hot ticket among travel agents as migrants try to reach US
California authorizes expansion of Waymo's driverless car services to LA, SF peninsula
Critical asset just had biggest fall on record (Ad)
Norway's hospitalized king gets a pacemaker in Malaysia after falling ill during vacation
College athletes will need school approval for NIL deals under bill passed by Utah Legislature
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
A US appeals court ruling could allow mine development on Oak Flat, land sacred to Apaches
Peace, music and memories: As the 1960s fade, historians scramble to capture Woodstock's voices
Critical asset just had biggest fall on record (Ad)
In Senegal's capital, Nicaragua is a hot ticket among travel agents as migrants try to reach US
California authorizes expansion of Waymo's driverless car services to LA, SF peninsula
Critical asset just had biggest fall on record (Ad)
Norway's hospitalized king gets a pacemaker in Malaysia after falling ill during vacation
College athletes will need school approval for NIL deals under bill passed by Utah Legislature
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
A US appeals court ruling could allow mine development on Oak Flat, land sacred to Apaches
Peace, music and memories: As the 1960s fade, historians scramble to capture Woodstock's voices
Critical asset just had biggest fall on record (Ad)
In Senegal's capital, Nicaragua is a hot ticket among travel agents as migrants try to reach US
California authorizes expansion of Waymo's driverless car services to LA, SF peninsula
Critical asset just had biggest fall on record (Ad)
Norway's hospitalized king gets a pacemaker in Malaysia after falling ill during vacation
College athletes will need school approval for NIL deals under bill passed by Utah Legislature

It’s high time to take a look at HEICO Corporation

Rising sun over the Earth and its landforms, view of Europe, North Africa and Middle East. Elements of this image furnished by NASA

Key Points

  • HEICO Corporation had a solid quarter driven by organic and acquisitional growth that should persist in 2024. 
  • It carries a high valuation, but the growth trajectory supports it. 
  • Analysts are grabbing a seat on this aerospace ride: shares are expected to hit new highs in 2024. 
  • 5 stocks we like better than HEICO

Analysts note that HEICO Corporation NYSE: HEI benefits from cyclical strength in the commercial aerospace market. This low-yield, high-growth company is growing via demand for "the majority of our commercial aerospace products" and acquisitions, which have boosted the business into a hyper-growth phase. Acquisitions completed in 2023 include Exxelia for the electronic technology group and Wencor for the flight support group. 

The result of its efforts and commercial business demand is a sustained uptrend in the share price that is taking the market to new highs. Because demand in the commercial aerospace and defense segments should persist and grow in 2024, this stock should continue to soar. 

Marketbeat.com tracks 10 analysts with ratings on Heico, which isn't a lot compared to some stocks but is healthy for defense names. Trends within the data are also beneficial; the stock has doubled its coverage over the last 12 to 15 months, and the consensus price target is trending higher. 


The price target is also leading the market and should continue to trend higher now that the Q4 results are in. 

HEICO Corporation had a robust quarter

HEICO Corporation had a robust quarter with organic demand and two acquisitions to boost results. The company reported $936.45 million in revenue for a gain of 53.65% over last year. This record is driven by double-digit organic growth with organic and acquisitional growth in both operating segments. The flight support group grew by 75% net, 20% organic, while the electronic technologies group grew by 20% net and 6% organic.

Margin is another area of good news. Rising costs and acquisition expenses impacted the company's gross and operating margins, but less than expected. The operating margin contracted by 380 basis points to leave GAAP earnings at 74 cents (or 1,000 bps better than expected) and up 350 bps compared to last year, including 10 cents in acquisition costs. Because acquisition expenses will quickly dissipate, you can expect bottom-line strength in 2024. 

The company didn't give formal guidance but provided an outlook for 2024 that was favorable to shareholders. The company expects organic and acquisitional growth during the year and another year of record-setting results. 

Highly valued HEICO investing in growth

HEICO management focuses on growing the business and maintaining a healthy balance sheet to aid its strategy. The company leaned into some debt to help it with 2023 acquisitions, but leverage is still low and should fall over the coming year. Debt to income is just over 6x while net-debt-to-earnings before interest, taxes, depreciation and amortization (EBITDA) rose to 3x compared to 0.25x year-over-year (YOY). 

The stock carries a high P/E multiple, about 3.5x greater than its closest competitors, which trade near 15x earnings, including Lockheed Martin Corporation NYSE: LMTRaytheon Technologies Corporation NYSE: RTXGeneral Dynamics Corporation NYSE: GD and Textron Inc. NYSE: TXT

However, it has a more robust growth outlook to support the value and a dividend to help mitigate some risk. Regarding dividends, the yield is low at only 0.1% of the stock price but incredibly safe. The company pays less than 5% of earnings, preferring to invest in growth, but may lean into distributions as it matures. 

The technical outlook: HEICO flies to a new high, with an uptrend in play

Shares of HEICO are in a sustained uptrend and moving to new highs following the Q4 release. The price action is up more than 3% and may continue to trend higher over the next few months. However, because the price action is well above the 30-day moving average and created a gap with the post-release action, there is the risk of a pullback. In this scenario, the market may move toward the $180 level or lower in search of firm support before it advances further. 

HEICO Corporation chart

→ Critical asset just had biggest fall on record (From Stansberry Research) (Ad)

Should you invest $1,000 in HEICO right now?

Before you consider HEICO, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and HEICO wasn't on the list.

While HEICO currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Textron (TXT)
2.4424 of 5 stars
$88.68-0.4%0.09%19.40Hold$87.50
Lockheed Martin (LMT)
4.5764 of 5 stars
$426.46-0.4%2.95%15.48Hold$491.92
General Dynamics (GD)
3.7751 of 5 stars
$271.95-0.5%1.94%22.62Moderate Buy$271.69
RTX (RTX)
3.7683 of 5 stars
$89.80+0.1%2.63%40.09Hold$91.71
HEICO (HEI)
3.1002 of 5 stars
$193.89+0.3%0.10%63.36Moderate Buy$203.00
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


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