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 17.7% to $315.39 per share while the index has gained 15.6%.
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. Organic Growth Indicates Solid Core Business
Investors interested in Aerospace companies should track organic revenue in addition to reported revenue. This metric gives visibility into HEICO’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, HEICO’s organic revenue averaged 9.6% year-on-year growth. This performance was solid and shows it can expand steadily without relying on expensive (and risky) acquisitions. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
HEICO’s EPS grew at a remarkable 13.2% compounded annual growth rate over the last five years. This performance was better than most industrials businesses.
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 17.5% over the last five years.
Final Judgment
These are just a few reasons HEICO is a high-quality business worth owning, but at $315.39 per share (or 62.3× forward P/E), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More Than HEICO
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