What happened
Aerospace component manufacturer Heico (HEI 0.10%) (HEI.A 0.01%) reported a mixed quarter, beating on earnings but falling a little flat on revenue. On a day where markets are under pressure and geopolitical concerns could crimp commercial aviation, the results were enough to cause the shares to fall as much as 5%.
So what
Heico is a holding company for a number of businesses that make components for aerospace, industrial, and medical products. On Wednesday night, the company reported that fiscal first-quarter net income rose 23% year over year to $86.9 million, or $0.63 per share, on revenue of $490.34 million.
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Wall Street had been expecting earnings of $0.61 per share on revenue of $493 million. Commercial aviation sales helped push organic revenue up 13% in the quarter as airlines begin to restock spare parts as they move past the pandemic.
CEO Laurans A. Mendelson in a statement said Heico remains "cautiously optimistic that the ongoing worldwide rollout of pandemic vaccines, including boosters, will continue to positively influence global commercial air travel and benefit the markets we serve."
But given the uncertainty, Heico is not providing any fiscal 2022 sales or earnings guidance.
Now what
The earnings were fine, but on a day when the bias is to the sell side it is no surprise that the stock is under some pressure. Although few things are certain at this moment, a credible case can be made that war in Ukraine will crimp flying in that part of the world for some time, and the expected higher oil prices could curtail airline expansion efforts elsewhere, which could trickle down to parts suppliers like Heico.
The best thing an investor can do is try to focus on the long term. Heico is a well-run supplier to an important industry that should see long-term demand growth thanks to an emerging global middle class and increasing world mobility. The pandemic and now war have made it hard to know what will become of Heico, but this company remains a solid part of any portfolio focused on the next five years or longer.
