Heico stock outperforms estimates on strong aerospace aftermarket demand

Investing.com - Heico Corporation (NYSE:HEI), a $42.4 billion market cap aviation specialist with a strong financial health score according to InvestingPro, reported fiscal third-quarter earnings that exceeded analyst expectations, driven by robust aerospace aftermarket sales and strong performance in electronics and space products.

The aviation parts manufacturer posted earnings per share of $1.26 for the quarter ending July 31, surpassing KeyBanc’s estimate of $1.12 and the Street consensus of $1.14. The company’s EBITDA reached $316 million, compared to KeyBanc’s projection of $295 million.

Free cash flow totaled $218 million, significantly higher than the $180 million estimate, primarily due to stronger net income, favorable working capital changes, and lower capital expenditures than anticipated.

The Flight Support Group (FSG) division delivered higher margins than expected, which helped offset slightly lower margins in the Electronic Technologies Group (ETG) segment. Overall company gross margins came in approximately 20 basis points below KeyBanc’s estimates.

KeyBanc maintained its Sector Weight rating on Heico stock, noting the company appears "well-positioned to capitalize on its organic growth opportunities" while its strong financial position provides flexibility for potential acquisitions.

In other recent news, HEICO Corporation reported impressive second-quarter financial results for fiscal year 2025, with earnings per share reaching $1.12, surpassing the consensus estimate of $1.03. The company’s total revenue increased by 15% year-over-year, exceeding market expectations by 4%, driven by approximately 11% organic growth. In light of these results, RBC Capital Markets raised its price target for HEICO to $315 from $285, maintaining an Outperform rating. Similarly, BofA Securities increased its price target to $355 from $320, citing strong organic growth potential in the aerospace aftermarket. Fitch Ratings upgraded HEICO’s Long-Term Issuer Default Rating to ’BBB+’ from ’BBB’, highlighting the company’s expanding cost-competitive product portfolio and high-return growth opportunities. Additionally, HEICO announced a 9% increase in its semiannual cash dividend, raising it to 12 cents per share. Meanwhile, S&P Global Ratings revised its outlook for The Heico Cos. LLC to negative due to high leverage, affirming a ’BBB-’ issuer credit rating. These developments reflect the varied financial landscape and strategic adjustments impacting HEICO and its subsidiaries.

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