HEICO: A Terrific Company with Great Execution, but Unattractive Valuation

HEICO is a great company with excellent execution, but the author is hesitant to invest at current valuation. As an aftermarket aircraft-parts maker, HEICO has been a successful business, and the author has covered it since 9/9/24. However, the author believes the current valuation is too high, preventing them from investing.

Heico Corporation (NYSE: HEI) reported robust financial results for the third quarter, ending August 25, 2025. The company's revenue reached $1.15 billion, marking a 15.7% year-over-year (YoY) increase. Earnings per share (EPS) improved to $1.26, up from $0.97 in the same period last year, representing a 29.9% YoY increase [1].

The Electronic Technologies Group and Flight Support Group contributed significantly to the revenue growth. The Electronic Technologies Group saw a 10.5% YoY increase in net sales, while the Flight Support Group achieved a 17.8% YoY increase [1]. Operating income for the Flight Support Group reached $198.33 million, surpassing the three-analyst average estimate of $184.62 million [1].

Despite the strong earnings report, Heico's stock has returned -4.4% over the past month. This may be due to market sentiment or other external factors. Analysts expect a revenue increase to $5.3 billion by 2028 and earnings to reach $919.6 million [1].

Institutional investors have shown confidence in Heico. Capital Fund Management S.A. increased its position in Heico's shares by 79.8%, acquiring a total of 23,959 shares valued at approximately $6.4 million [3]. Additionally, the company's recent acquisition of avionics company Gables Engineering, Inc., further supports the positive outlook [1].

However, the author remains hesitant to invest at the current valuation. As an aftermarket aircraft-parts maker, Heico has been a successful business, and the author has covered it since 9/9/24. The company's strategic acquisitions and strong operational performance are commendable, but the current valuation seems to be too high, preventing the author from making an investment decision.

References:
[1] https://www.ainvest.com/news/heico-achieves-strong-q3-results-sales-earnings-growth-2508/
[2] https://www.benzinga.com/analyst-stock-ratings/price-target/25/08/47308554/heico-gears-up-for-q3-print-here-are-the-recent-forecast-changes-from-wall-streets-most-accurate-analysts
[3] https://www.marketbeat.com/instant-alerts/filing-capital-fund-management-sa-raises-position-in-heico-corporation-hei-2025-08-23/