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HEICO (HEI) is back on investor radars after recent share price swings, with the stock showing mixed returns over the past week, month, and past 3 months alongside solid reported revenue and net income figures.
See our latest analysis for HEICO.
At a share price of US$289.17, HEICO has seen a 6.4% 7 day share price return but a 5.8% 30 day and 18.2% 90 day share price decline, while 1 year and 5 year total shareholder returns of 15.8% and 114.6% indicate longer term momentum has been stronger than recent trading suggests.
If HEICO’s recent swings have you thinking about where else growth and risk might show up next, this could be a good moment to scan for 33 robotics and automation stocks.
With HEICO posting annual revenue of US$4.63b and net income of US$712.62m, yet trading about 22% below an indicated intrinsic value and 24% below analyst targets, is this a genuine opening, or is the market already pricing in future growth?
At a last close of $289.17 versus a narrative fair value of about $370.89, HEICO is framed as materially undervalued, with that gap tied to specific growth, margin, and valuation assumptions.
Accelerating acquisition activity in highly fragmented aerospace and specialty electronics markets is expanding HEICO’s product offering and customer base, supplementing strong organic growth with immediately accretive earnings and creating compounding effects on overall earnings and net margins.
Want to see what is baked into that upside gap? The narrative leans on compounded revenue growth, fatter margins, and a premium earnings multiple that rivals fast growing sectors.
Result: Fair Value of $370.89 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this upside story depends on acquisitions continuing to perform and on OEMs not tightening control of aftermarket parts, both of which could weaken the thesis.
Find out about the key risks to this HEICO narrative.
The narrative leans heavily on discounted cash flows to argue HEICO looks 22.2% below a fair value of about $371.58, yet the market is paying around 56.6x earnings compared with a fair ratio of 29.9x, 39.4x for the industry, and 55.2x for peers. Does that rich P/E leave enough room for error?
Before leaning on either story too much, it is worth stress testing what kind of earnings path would justify this premium, and how comfortable you are with paying up when the fair ratio points lower. See what the numbers say about this price — find out in our valuation breakdown.
