HEICO CORPORATION (HEI): what the price requires
At today's price, HEICO CORPORATION (HEI) is priced for today's economics sustained for ~8.6 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/HEI
Headline
| Field | Value |
|---|---|
| Ticker | HEI |
| Company | HEICO CORPORATION |
| Current price | $344.57/sh |
| Composition | FSG - Aftermarket replacement parts 43% / FSG - Repair and overhaul parts and services 17% / FSG - Specialty products 10% / ETG - Electronic component parts for defense/space/aerospace 25% / ETG - Electronic component parts for other industries 6% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 13.2% |
| Operating margin today | 23.4% |
| Margin compression implied | -10.2pp |
| Must persist for | 8.6y |
| Multiple paid | 46x operating income |
The operating-margin requirement is derived from the framework's value band at year 6, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +0.88σ |
| cohort percentile (of 225 peers) | 88 |
| sustained it ~8.6 years at this level | 17% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.28x | 5 | expensive |
| Earnings | 5.23x | 4 | expensive |
| Relative | 2.01x | 5 | expensive |
| Growth | 0.92x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $213.60 | 1.61x | yes | FCF base $1.0B, growth 19% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection |
| DCF Exit Multiple | Growth | $385.16 | 0.89x | yes | Exit EV/EBITDA: 33.7x / 35.7x / 37.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $211.78 | 1.63x | yes | P/E 33.87x (blended: static sector reference 22x + trailing (TTM) 62x), scenarios: 27.6x / 33.9x / 40.2x (bear / base = reference held flat / bull), EV/EBITDA 20.5x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $60.51 | 5.69x | yes | BV/sh $33.83, ROE (TTM) 16.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $79.89 | 4.31x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $374.35 | 0.92x | yes | Rev $4.9B, growth 19% (input: historical growth; tapered), Terminal P/S: 8.1x / 9.9x / 11.7x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $171.35 | 2.01x | yes | EPS $5.59, growth 31% (input: historical EPS growth), PEG=2.01 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $47.29 | 7.29x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.76B × (1−21%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $80.76 | 4.27x | yes | BV $33.83 + 5yr PV of (ROE (TTM) 16.5% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $65.23 | 5.28x | yes | √(22.5 × EPS $5.59 × BVPS $33.83) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $136.13 | 2.53x | yes | EBITDA $1.36B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $72.43 | 4.76x | yes | FCF $926.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $180.37 | 1.91x | yes | EPS $5.59 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $22.13 | 15.57x | yes | BV $33.83 × (ROIC 6.1% / WACC 9.2%) |
| P/Sales Sector | Relative | $69.63 | 4.95x | yes | Revenue $4.91B × sector P/S 2.0x |
| PEG Fair Value | Relative | $209.63 | 1.64x | yes | EPS $5.59 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $60.43 | 5.70x | yes | EPS $5.59 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.4b |
| Net debt / NOPAT (after-tax) | 2.71x |
| Net debt / operating income (pre-tax) | 2.13x |
| Interest coverage | 8.8x |
| Share count CAGR (dilution) | 0.6% |
| Burning cash | no |
Bullet Takeaways
- HEICO makes FAA-approved replacement parts that airlines buy instead of the original manufacturer's, and it describes itself in its filing as "the largest independent supplier of non-OEM jet engine and aircraft component replacement parts", a razor-and-blades aftermarket position where the razor is an airframe that stays in service for thirty years or more.
- The price is the risk: at roughly 45 times company-wide operating income, buyers are underwriting the current pace of growth to hold for about eight to nine years, and only about 18% of comparable fast-growers have sustained that long.
- The next print lands around August 24, 2026, after a second quarter where net sales rose 25% and Flight Support Group operating income set an all-time record, up 31% year over year.
Bull Case
Start with where the numbers have been heading. In the second quarter of fiscal 2026 net sales rose 25% to $1,375.7 million, net income climbed 49% to $233.8 million, and Flight Support Group operating income set an all-time quarterly record, improving 31% over the prior year. Flight Support, which is roughly seventy cents of every revenue dollar, grew 21% with 19% of that organic. This is not a company squeezing a mature base. It is a company whose largest, highest-margin engine is accelerating, and the market has been repricing it upward on each print.
The reason the base compounds rather than churns sits in what HEICO actually sells. Airlines buy its parts because they cost less than the original manufacturer's and carry the same FAA approval, and the company describes itself in its 10-K as "the largest independent supplier of non-OEM jet engine and aircraft component replacement parts". The moat is the approval process itself. Each new part HEICO gets certified is a small annuity that runs for the service life of the airframe it fits, and the company keeps widening the catalog by spending on it: Flight Support research and development was $43.7 million in fiscal 2025, up from $36.7 million in 2024 and $26.4 million in 2023. That is a business that grows its own future demand rather than waiting for it.
The second engine is the Electronic Technologies Group, and it is turning at the right moment. Defense budgets across the United States and allied nations are rising, and ETG's book of aerospace, defense, and space electronics has run at record backlog on that demand. HEICO's own history frames the scale of the compounding: the company grew net income from "$2.0 million to $690.4 million" over its measured span, "representing a compound annual growth rate of approximately 18%". Bolt-on acquisitions are the third leg, funded from cash flow and a credit line the company can expand by $750 million to a $2.75 billion facility. Two segments, both growing, both feeding a disciplined acquisition machine. That is the bet the bull is making.
Bear Case
The whole bear case lives in one number and what it demands of the future. At today's price the market pays about 45 times company-wide operating income, and inverting that price says growth has to hold near HEICO's self-funding ceiling for roughly eight to nine years to make the math work. The near-term rate is within what HEICO has recently delivered; the stretch is the duration. Of comparable fast-growers, only about 18% sustained that pace for the roughly eight-and-a-half years the price is underwriting. The company earns a strong operating margin around 23.5% today, but the price is not paying for today's margin. It is paying for a persistence that history rarely grants, and if the growth fades earlier than the price assumes, the multiple that carried the stock compresses toward what the static methods already support.
The risk that would end the run is the one HEICO names first in its own filing. Its business is "dependent upon conditions in the aviation industry, which could be impacted by lower demand for commercial air travel or airline fleet changes causing lower demand for our goods and services". Aftermarket parts sell when planes fly and get repaired; a demand shock or a wave of fleet retirements pulls the annuity forward and thins it. On the defense side, the same filing flags exposure to "reductions in defense, space or homeland security spending by U.S. and/or foreign customers". The two engines that make the bull case are the same two that carry cyclical and political demand risk the price does not appear to discount.
The growth machine also runs on acquisitions and debt, and that changes the downside shape. HEICO now carries about $2.4 billion of net debt, roughly two times a year's operating income, with interest covered about nine times over. That is manageable while the aftermarket runs hot. It is less comfortable if a demand shock arrives while the company is mid-integration on deals like Sherwood and Southwest Antennas, both funded to be accretive within a year. The share count has crept up slightly rather than fallen, so there is no buyback cushioning the per-share math. A company that acquires aggressively into a strong cycle is exactly the company that finds its balance sheet tested when the cycle turns, and the price leaves little room for that test to go badly.
Valuation
The most useful way to read HEICO at $336.72 (July 1, 2026) is to ask what that price is betting. Inverting it says the market is paying about 45 times company-wide operating income, which requires growth to hold near the company's self-funding ceiling for roughly eight to nine years. HEICO already earns an operating margin around 23.5%, so the demand is not a margin the company has never shown. It is time: the price needs the current growth rate to persist far longer than most companies manage. Against the record of comparable fast-growers, only about 18% sustained that pace for the roughly eight-and-a-half years embedded here. That is the bet, stated plainly, and it is why the priced-in assumption reads as elevated rather than comfortable.
The methods used to triangulate value split cleanly, and the split is the signal. The asset-value lenses, the earnings-power lenses, and the peer-multiple lenses all land well below the price, several of them at a small fraction of it. Only the forward-growth methods reach today's level, and they get there by crediting the next several years of compounding at the current pace. When the static frames say richly valued and only the growth frame defends the price, the premium is not an error in the methods. It is what the market pays for durable compounding that backward-looking arithmetic structurally cannot capture. The company's disclosed record supports the pedigree behind that premium: net income compounded from "$2.0 million to $690.4 million" at "a compound annual growth rate of approximately 18%". The forward re-pricing methods and the trailing peer-multiple lens sit on different bases: the trailing lens reads the price as far above what current multiples defend, while the forward methods, which credit the coming years of growth, land near it. Both are true at once because they answer different questions.
The balance sheet sets the floor under all of it. Net debt is about $2.4 billion, a little over two times a year's operating income, with interest covered roughly nine times and no cash burn. That is a company with room to keep acquiring, not one whose solvency is in question. What it does not do is cushion the price. The buyer here owns a genuinely excellent aftermarket franchise, and pays a price that requires that franchise to keep growing at its recent pace for roughly the next eight to nine years. The gap between the growth frame and every other frame is the width of that requirement.
Catalysts
The most recent print reset the trajectory upward. In fiscal second-quarter 2026, HEICO reported net sales up 25% to $1,375.7 million and net income up 49% to $233.8 million, or $1.66 in diluted EPS, which beat the roughly $1.33 the street expected. Flight Support Group net sales rose 21% to $929.4 million with 19% organic growth, and the segment set all-time records for both operating income and net sales. The stock jumped roughly 12% on the report. The next scheduled update is the fiscal third-quarter release around August 24, 2026, which will show whether the aftermarket demand that drove the record quarter is still accelerating or merely holding.
Two forces feed the near-term story. On defense, management pointed to the United States and allied nations recognizing the need to invest more and replace depleted stocks, and said HEICO is seeing that in its defense sales, orders, and backlog, with the Electronic Technologies Group posting record backlog. On the acquisition side, Flight Support acquired 80% of Sherwood Avionics and Accessories, an FAA and EASA Part 145 repair station, alongside Southwest Antennas; both are expected to be accretive within a year. Management has guided to increased sales for the rest of fiscal 2026 in both operating groups, backed by strong demand and a steady stream of deals.
Analyst sentiment is constructive but not uniformly so at this price. UBS set a $390 target on June 1, 2026 while keeping a neutral rating, and the broader consensus is a buy with an average 12-month target near $386, a high estimate of $471, and a low of $290. The spread between the neutral house and the bulls tracks the report's own tension: nobody disputes the quality of the franchise, only what it is worth after a run this strong.
Peer Cohorts (Per Segment, With Filing Citations)
Flight Support Group (reported)
- TDG (TransDigm Group Incorporated)
- (no filing in the citation store)
- AIR (AAR CORP)
- (no filing in the citation store)
- SARO (StandardAero, Inc.)
- (no filing in the citation store)
- WLFC (WILLIS LEASE FINANCE CORP)
- (no filing in the citation store)
- FTAI (FTAI AVIATION LTD.)
- (no filing in the citation store)
- LOAR (Loar Holdings Inc.)
- (no filing in the citation store)
- HWM (HOWMET AEROSPACE INC.)
- (no filing in the citation store)
Electronic Technologies Group (reported)
- TDY (TELEDYNE TECHNOLOGIES INC)
- (no filing in the citation store)
- MRCY (MERCURY SYSTEMS, INC.)
- (no filing in the citation store)
- CW (CURTISS-WRIGHT CORPORATION)
- (no filing in the citation store)
- KTOS (Kratos Defense & Security Solutions, Inc.)
- (no filing in the citation store)
- DRS (Leonardo DRS, Inc.)
- (no filing in the citation store)
- ESLT (ELBIT SYSTEMS LTD)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
HEICO Q2 FY2026 earnings release · HEICO FY2025 10-K, accession 0000046619-25-000082 · UBS research note, June 1, 2026 · MarketBeat analyst consensus, June 2026