Skip to Content

Heico Corp HEI

Morningstar Rating
$225.17 −1.15 (0.51%)
View Full Chart
Unlock our analysis with Morningstar Investor

Company Report

Heico Enjoys Broad Exposure to Aerospace and Defense Parts Manufacturing and Maintenance

Heico exploits the switching costs created by aerospace original equipment manufacturers for their spare parts. OEMs typically build the hefty cost of research and development and regulatory airworthiness certification of their products into the prices they charge for servicing and/or replacing them in the aftermarket. Heico reverse-engineers these complex parts at a fraction of the original development cost, gains regulatory approval to sell or install its functionally equivalent parts, and charges around 30%-40% less than the original. Known in the United States as FAA parts manufacture authority, or PMA, regulatory approval is critical as most buyers can only buy OEM or PMA certified parts to retain the airworthiness certification of their aircraft. Most operators of newer aircraft stick with OEM parts because of long-term service contracts with engine OEMs or lease terms aimed at preserving the resale value of the aircraft, generally limiting Heico to supply parts for aircraft and systems in later stages of their service life.

Price vs Fair Value

HEI is trading at a 789% premium.
Price
$225.17
Fair Value
$795.00
Uncertainty
Medium
1-Star Price
$568.17
5-Star Price
$447.90
Economic Moat
Fprbdhc
Capital Allocation
Bgrdngpmh

Bulls Say, Bears Say

Bulls

Heico independently develops replacement parts for highly complex aircraft components—the juiciest market segment in aerospace, with a fraction of the required R&D as OEMs.

Bears

Private equity firms have entered the defense supplier market and may push up prices for target companies, which would limit Heico's ability to generate value-accretive inorganic growth.

Is it the right time to buy, sell, or hold?
Start a free trial of Morningstar Investor to unlock exclusive ratings and continuous analyst coverage to help you decide if HEI is a good fit for your portfolio.

News

Trading Information

Previous Close Price
$226.32
Day Range
$222.95227.89
52-Week Range
$155.42232.02
Bid/Ask
$150.00 / $358.02
Market Cap
$31.19 Bil
Volume/Avg
605,414 / 393,656

Key Statistics

Price/Earnings (Normalized)
68.65
Price/Sales
8.95
Dividend Yield (Trailing)
0.09%
Dividend Yield (Forward)
0.10%
Total Yield
0.09%

Company Profile

Heico is an aerospace and defense supplier that focuses on creating niche replacement parts for commercial aircraft and components for defense products. In commercial aerospace, Heico is the largest independent producer of replacement aircraft parts. In the defense market, the company produces niche subcomponents used in targeting technology as well as simulation equipment, among other categories. It operates as two segments: the flight support group,or FSG, and the electronic technologies group, or ETG, both of which supply the aerospace and defense sectors to different degrees. The company is persistently acquisitive, focusing on companies in similar or adjacent markets that are generating strong cash flow with the potential for growth.
Sector
Industrials
Industry
Aerospace & Defense
Stock Style Box
Mid Growth
Total Number of Employees
9,600

Competitors

Valuation

Metric
HEI
TDG
BA
Price/Earnings (Normalized)
68.6540.81
Price/Book Value
9.20
Price/Sales
8.959.791.43
Price/Cash Flow
46.3133.8358.50
Price/Earnings
HEI
TDG
BA

Financial Strength

Metric
HEI
TDG
BA
Quick Ratio
1.462.460.22
Current Ratio
3.523.711.14
Interest Coverage
5.512.680.21
Quick Ratio
HEI
TDG
BA

Profitability

Metric
HEI
TDG
BA
Return on Assets (Normalized)
7.79%8.59%−1.22%
Return on Equity (Normalized)
16.16%
Return on Invested Capital (Normalized)
11.33%14.71%0.74%
Return on Assets
HEI
TDG
BA
See how this stock stacks up to its competitors with Morningstar Investor

Aerospace & Defense Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
GE Aerospace
GE
BrjjmrlhDmn$174.7 Bil
RTX Corp
RTX
DrqbrhxwxKhq$135.1 Bil
Airbus SE ADR
EADSY
FvcthvzbBxqm$114.5 Bil
Lockheed Martin Corp
LMT
MqjfvgdjgsBldj$110.4 Bil
Boeing Co
BA
LpddyjbYybpj$110.0 Bil
General Dynamics Corp
GD
VtwjjjgkFcjb$78.3 Bil
TransDigm Group Inc
TDG
BcsplzyppDgv$69.5 Bil
Northrop Grumman Corp
NOC
DwtrncsfhzLmsmh$64.0 Bil
BAE Systems PLC ADR
BAESY
GhqyfmzGwss$50.3 Bil
Rolls-Royce Holdings PLC ADR
RYCEY
ZkwxhzyjLqgvqf$49.6 Bil

Sponsor Center