Component manufacturer Heico (HEI 2.09%) delivered better-than-expected quarterly results. Investors are buying in, sending Heico shares up 7% as of 11 a.m. ET.
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A solid beat in a volatile market
Heico is a maker of electrical components and other parts for aerospace and other industries. The company earned $1.12 per share in its fiscal second quarter ending April 30 on revenue of $1.1 billion, topping Wall Street's $1.04 per share on sales of $1.06 billion estimate.
Revenue was up 15% year over year, and cash flow from operations grew by 45% to $204.7 million.
In a statement, Laurans Mendelson, the company's executive chairman, and co-CEOs Eric Mendelson and Victor Mendelson said, "We remain confident in achieving net sales growth" throughout the remainder of fiscal 2025, including organic growth and the additions of recently completed acquisitions.
Is Heico a buy?
Heico, along with TransDigm Group, have set the standard in the aerospace industry for using roll-up models to generate substantial long-term overperformance. The momentum at Heico shows no sign of stopping, with the executive team saying they see opportunities for "strategic acquisitions and organic growth" up ahead.
With global commercial aviation projected to grow at a steady clip over the next decade, there should be plenty of sales opportunities for these parts businesses. Heico thanks to its track record never looks cheap and today trades at an enterprise value that is 35 times expected earnings before interest, taxes, depreciation, and amortization (EBITDA). But the company has proven it is able to live up to high expectations.
For investors interested in buying into commercial aviation but don't want to pick between airlines, Heico stock is a great way to get exposure to the sector.
