🛩️ HEICO CORPORATION: ANALYSIS 🛩️
HEICO Corporation, through its subsidiaries, designs, manufactures, and sells aerospace, defense, and electronic related products and services. The company's Flight Support Group segment provides jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components. This segment also distributes hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components for the commercial, regional, and general aviation markets; and offers repair and overhaul services for jet engine and aircraft component parts, avionics, instruments, composites, and flight surfaces of commercial aircraft, as well as for avionics and navigation systems, subcomponents, and other instruments utilized on military aircraft. Its Electronic Technologies Group segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and radio frequency (RF) interference shielding and suppression filters; power conversion and interface products; interconnection devices; power electronics; and underwater locator beacons and emergency locator transmission beacons.
Based on a sample of the last year [Nov/23 TTM], its average margins have been:
- Gross margin: ≈ 39.0%
- Operating margin: ≈ 22.3%
- EBITDA margin: ≈ 26.6%
- Net margin: ≈ 14.4%
Pros:
- Operates in a relatively oligopolistic sector
- Acceptable margins for your main business sector.
- Well positioned with important costumers in may sectors (government, industrial and airlines)
Cons:
- Non Growth CAPEX and high Maintenance CAPEX
- High impact of interest rate on their Net Debt
- High Net Debt ratio and Operative Expenses
Based on the last report, their normalized EPS was ≈ $2.92 USD and its last average ROIC [TTM] was ≈ 13.93%. If an annual average Forward PER 50 is set as a benchmark with an EPS intensity of ± 21.23%, the potential forward spread target could be:
- Optimistic: ≈ $177.02 USD
- Neutral: ≈ $146.01 USD
- Negative: ≈ $115.01 USD
At least, an EPS of $0.6861 USD is required for the next quarter, to keep the metrics.
In other hand, if an annual average Forward EV/EBITDA 30 is set, an EBITDA increases of ± 29%, a Net Debt increases of 25%, a Dividends increase of 0% and Shares Outstanding increases of 5%, the potencial spread price target could be:
- Optimistic: ≈ $190.7 USD
- Neutral: ≈ $148.5 USD
- Negative: ≈ $95.17 USD
Finally, according to its current P/S ration, a possible spread might be at:
- P/S 5: ≈ $107.38 USD
- P/S 10: ≈ $214.76 USD
The best analysis is yours!
M.F. J. Joel Padilla
Copyright: Joel Padilla 2023
Comentarios
Publicar un comentario