Yahoo Finance Heico (HEI) Up 7.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Heico Corporation (HEI). Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Heico due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
HEICO’s Q3 Earnings Surpass Estimates, Sales Increase Y/Y
HEICO Corporation’s third-quarter fiscal 2024 earnings per share (EPS) of 97 cents beat the Zacks Consensus Estimate of 91 cents by 6.6%. The bottom line also improved 31.1% from the prior-year quarter’s 74 cents.
HEI’s Total Sales
The company’s net sales increased 37.3% year over year to $992.2 million in the reported quarter. The figure also beat the Zacks Consensus Estimate of $987 million by 0.6%.
The year-over-year upside was driven by record operating results from the Flight Support Group segment as well as strong contributions from HEI’s fiscal 2023 and 2024 acquisitions.
HEICO’s Operational Update
HEICO’s cost of sales increased 35.8% year over year to $603 million in the quarter under review. The company’s selling, general and administrative expenses rose 33.6% to $172.8 million.
Interest expenses of $36.8 million jumped a massive 203.5% from $12.1 million in the prior-year quarter.
Segmental Performance
Flight Support Group: Net sales from this segment surged 68.3% year over year to $681.6 million. This rise was driven by strong organic growth of 15% and the positive impact of its fiscal 2023 and 2024 acquisitions.
The segment’s operating income soared 72% year over year to $153.6 million. This increase was due to solid net sales growth and an improved gross profit margin.
Electronic Technologies Group: The segment’s net sales decreased 1.2% to $322.1 million due to lower net sales for other electronics and medical products.
The segment’s operating income rose 2% year over year to $75.8 million, driven by an improved gross profit margin.
HEI’s Financial Details
As of July 31, 2024, HEI’s cash and cash equivalents totaled $202.9 million compared with $171 million as of Oct 31, 2023.
Cash flow provided by operating activities was $466.7 million during the first nine months of 2024, reflecting a 55.4% rise from the prior-year period’s level.
HEICO reported long-term debt (net of current maturities) of $2.25 billion as of July 31, 2024, down from $2.46 billion as of Oct 31, 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Heico has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Heico has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Heico Corporation (HEI) : Free Stock Analysis Report
