HEIKO today
(As of 12/20/2024 5:45 PM ET)
- 52 week range
- $169.70
▼
$283.60
- Dividend yield
- 0.09%
- P/E ratio
- 70.07
- Target price
- $270.20
Defense stocks with names like HEICO exploded in 2024. NEW YORK: HELLO gaining more than 50% at the peak of the movement. Now, stepping back, the question is whether this aerospace company is worth buying or if it’s time to quit, sit on the fence and wait for better prices. As the company grows organically, acquires businesses, generates cash flow, reduces debt and is supported by global trends, its shares are likely to rise next year. In this case, the question becomes the right target price.
HEICO Posts Mixed Results Including Higher Earnings and Record Earnings
HEICO reported mixed results for the fourth quarter, but expectations were high, results were strong and the positive outlook makes the price pullback a likely buy signal for long-term investors. The company reported net revenue of $1.01 billion, up 7.9% year over year. Revenue missed MarketBeat’s consensus estimate by a slight $0.02 billion (about 190 basis points) and was offset by wider margins and forecast for robust growth in 2025.
HEICO stock forecast today
$270.20
Growth potential 13.08%Moderate purchase
Based on 10 analyst ratings
| High forecast | $285.00 |
|---|---|
| Average forecast | $270.20 |
| Low forecast | $245.00 |
HEICO Stock Forecast Details
The company’s fourth-quarter and full-year revenue set records thanks to the sustained strength of its flight support team focused on its commercial business. The commercial business grew for the 17th consecutive quarter and is expected to grow both organically and through acquisitions in 2025. Flight support group sales increased 15%, with organic growth of 12%, offset by a slight decline in the electronics group. The electronics group is more sensitive to government spending, often leading to what the company calls “patchy” results.
Margin is another strength, primarily driven by the Flight Support Group. The company recorded a 140 basis point improvement in consolidated operating margin, a 13% increase in EBITDA, a 15% increase in operating income and a 35% increase in net income. Cash flow growth was also strong, up 39%, with a net result of $0.99 in GAAP earnings, up $0.25 year-over-year and pennies above estimates despite revenue weakness. The company has not given specific guidance for next year, but is optimistic about growth in both segments and continued strength of FSG.
HEICO: improving balance sheet one quarter at a time
Key details from HEICO’s fourth-quarter results include an improved balance sheet. Highlights include a decrease in the cash position offset by an increase in current and total assets and a decrease in debt and total liabilities. Because of this, capital increased by 15%, and leverage decreased. The debt-to-net income ratio dropped nearly two notches to 4.3x, while the long-term debt-to-equity ratio fell to 0.6x from 0.77x, strengthening its already strong financial position. This is one of the reasons Warren Buffett is interested and why Berkshire Hathaway New York Stock Exchange: BRK.A bought in shares this year. The holding is small, but it is a vote of confidence and confirmation of prospects. Analysts forecast the defense company will increase profits by nearly 25% next year and 70% by 2028, compared with the 2024 total.
Analyst trends for 2024 are positive and are unlikely to change following the release of fourth-quarter results. Analysts have consistently issued revisions throughout the year, raising the consensus target by 35%. Consensus suggests about 5% of the preliminary closing price and 10% of critical target support, with the potential for another 7% to 10% at the upper end.
Price action following the release was negative, with shares down 5% in premarket trading. However, the market is above critical support and could trigger buying when the opening bell rings. If the price falls below the critical support around $245, the market could fall to $225 or lower. If support is confirmed, investors can look forward to a rebound that will likely take the market back to retest all-time highs and possibly set new highs.
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