Is HEICO (HEI) Still a Buy After Its Record Q4 Earnings Surge? Assessing Sustainable Growth and Valuation in a High-Momentum Industrial Play

HEICO Corporation (HEI) has long been a standout performer in the aerospace and defense sector, and its Q4 2025 results have only amplified its allure. With consolidated net income surging 35% year-over-year to $188.3 million-translating to $1.33 per diluted share-the company's Flight Support Group (FSG) and Electronic Technologies Group (ETG) delivered 21% and 14% revenue growth, respectively according to earnings data. These figures, coupled with a 44% jump in operating cash flow to $295.3 million and a net debt-to-EBITDA ratio of 1.6, underscore HEICO's disciplined capital allocation and operational efficiency as reported. Yet, as the stock trades at an enterprise value/EBITDA (EV/EBITDA) multiple of 39.15-well above the industry average of 36.5x according to valuation data-investors must ask: Is this high-momentum industrial play still a buy, or has the market already priced in all its future potential?

Sustainable Growth: A Dual-Engine Model

HEICO's growth story is powered by two engines: organic demand in aerospace maintenance and strategic acquisitions. The FSG, which accounts for 69% of total revenue, capitalized on robust demand for aircraft repair and overhaul services, with operating margins climbing to 24.1% in Q4. This outperformance reflects HEICO's ability to leverage its niche expertise in high-margin aerospace components, particularly as global flight hour demand rises and legacy fleets require extended maintenance according to industry outlook. Meanwhile, the ETG's 14% revenue growth-driven by defense electronics and avionics-highlights HEICO's diversification into markets less sensitive to cyclical downturns as reported.

Strategic acquisitions have further accelerated growth. Five deals completed in fiscal 2025 added $150 million in incremental revenue and bolstered HEICO's technical capabilities. Management's acquisition strategy, which targets businesses with EBITDA margins above 20% and leverages up to 4-6x EBITDA for financing, has proven effective in compounding earnings. With a $1.21 billion revenue base and a 27.4% EBITDA margin in Q4 according to financial reports, HEICO's financials suggest a scalable model that can sustain growth even as it scales.

Valuation Metrics: Justified Premium or Overreach?

HEICO's EV/EBITDA of 39.15 is undeniably rich, especially against a backdrop of declining industry-wide EBITDA margins. The aerospace and defense sector's trailing EBITDA margin fell to 7.41% in Q2 2025, dragged down by rising operating costs, while HEICO's 27.4% margin positions it as a rare high-margin outlier. Analysts have assigned HEICO a forward EV/EBITDA of 34.25 according to key statistics, implying confidence in its ability to maintain profitability. However, this premium must be weighed against broader industry trends.

For context, peers like TransDigm Group (TDG) and Curtiss-Wright (CW) trade at 38.5x and 43x EV/EBITDA, respectively according to valuation data, suggesting HEICO's valuation is in line with its closest competitors. Yet, the company's 39.15x multiple still exceeds the sector median of 20.94x according to financial analysis, raising questions about its sustainability. A key differentiator is HEICO's growth trajectory: its 19% revenue growth in Q4 as reported outpaced the sector's projected 8.64% CAGR for 2025–2034 according to market research, while its cash flow generation ($295.3 million in Q4 as reported) provides flexibility to fund further acquisitions without overleveraging.

Industry Headwinds and Strategic Resilience

While HEICO's fundamentals are robust, the aerospace and defense sector faces headwinds. Supply chain bottlenecks and workforce shortages have delayed production timelines and inflated costs according to industry data, with EBITDA margins for private aerospace firms dipping to 5.65% on a trailing twelve-month basis. For HEICO, however, these challenges may present opportunities. Its focus on aftermarket services-where demand is expected to grow at 3.2% CAGR through 2035 according to industry outlook-positions it to benefit from extended fleet lifecycles and rising maintenance needs. Additionally, its disciplined acquisition strategy ensures that new targets are selected for their margin resilience, as reported mitigating exposure to volatile production cycles.

Conclusion: A Buy, But With Caution

HEICO's Q4 results reaffirm its status as a high-conviction industrial play. Its dual-engine growth model, superior margins, and acquisition-driven scalability justify a premium valuation, particularly in a sector where EBITDA margins are deteriorating according to industry data. However, the stock's 39.15x EV/EBITDA multiple demands that management continue to deliver on its growth promises. With a $73.9 billion U.S. aerospace and defense trade surplus in 2024 according to industry reports and a $443 billion economic contribution according to industry reports, the industry's long-term fundamentals remain strong. For investors willing to tolerate near-term volatility, HEICO's disciplined approach to capital allocation and its leadership in high-margin aerospace niches make it a compelling, albeit expensive, buy.