By Anton Ladnyi, CFA · ex-Goldman Sachs · ex-J.P. MorganPublished Updated
HEI — Heico at ~$345 on ~55x FY2026E EPS with Q2 FY2026 revenue +25%, net income +49%, EPS $1.66 crushing $1.33 consensus (+25%), stock +12% on May 28; Sherwood Avionics and Southwest Antennas acquisitions extend defence MRO; Flight Support Group organic +18% from commercial aviation aftermarket boom.
HEI Price Target & Rating
HEI's grade is Avoid, with elevated downside risk (CVaR -20.0%), and quality metrics (net margin 16%, ROE 17%). Heico Corporation (HEI) trades at $348.18 with a valuation grade of Avoid: a trailing P/E of 62.1x at a 182% premium to sector median, net margins of 16.1%, a DCF-implied intrinsic range of $232–$357 suggesting a -15% margin of safety, beta 0.95 (moderate risk profile).
DCF Valuation Range
Key Takeaways
Valuation: Avoid grade — P/E 62.1x — DCF range $232–$357 implies -15% margin of safety
Risk: CVaR -20.0% (95th percentile, 1-month) indicates moderate tail exposure; beta of 0.95 amplifies broad market moves in both directions
Strengths: Quality 4.0/5, 16% net margin, 17% ROE dominate the factor profile
Why AvoidTrading at a significant premium to intrinsic value — DCF and analyst consensus suggest limited margin of safety; valuation risk outweighs near-term upside
Main riskP/E of 62.1x creates asymmetric downside on any earnings disappointment
Tail riskCVaR -20.0% over one month at the 95th percentile
DCF range$232–$357 intrinsic range; margin of safety -15%
Best useCore large-cap Industrials holding — not a source of diversified sector exposure
Next watchEarnings delivery consistency and margin trajectory
Quantitative Factor Profile
Value
2.0 / 5
Quality
4.0 / 5
Momentum
3.0 / 5
Volatility
4.0 / 5
Size
3.0 / 5
Key Metrics
HEI Key Metrics — Heico Corporation 2026
Metric
Value
Current Price
$348.18
P/E Ratio (TTM)
62.1x
Forward P/E
54.1x
PEG Ratio
1.12x
P/S Ratio
9.9
EV/EBITDA
37.5
Beta
0.95
Net Margin
16.1%
ROE
17.2%
Debt/Equity
48.0%
Dividend Yield
0.07%
CVaR (95%, 1M)
-20.0%
Market Cap
$48.6B
Analyst View
Anton Ladnyi, CFA · A.L. Capital AdvisoryUpdated 2026-05-30
Rating Rationale
HEI — Heico at ~$345 on ~55x FY2026E EPS with Q2 FY2026 revenue +25%, net income +49%, EPS $1.66 crushing $1.33 consensus (+25%), stock +12% on May 28; Sherwood Avionics and Southwest Antennas acquisitions extend defence MRO; Flight Support Group organic +18% from commercial aviation aftermarket boom.
Investment Thesis
↑ Bull Case
Q2 FY2026 (Feb-Apr): revenue $1.38B (+25%), net income +49%, EPS $1.66 vs $1.33 consensus — massive beat; operating cash flow $292M (+43%)
Commercial aviation super-cycle: airlines running older fleets due to Boeing/Airbus delivery delays drives unprecedented PMA aftermarket demand for FSG
Flight Support Group organic growth +18% in Q2 FY2026 — exceptionally strong; structural tailwind from 5+ years of accumulated fleet age
The rating on HEI is driven by a factor profile that is genuinely mixed — there is no clean narrative here, which is itself a signal worth taking seriously. The variable I track most closely is gross margin trajectory. That multiple can only be sustained if operating leverage is real — specifically whether the margin profile at scale supports what the market is already pricing in, or whether that future still needs to be earned. The scenario that changes my read is a genuine valuation reset — not a small pullback, but a re-rating that reflects the actual risk profile. Until that happens, the risk/reward is not there.
— Anton Ladnyi, CFA
Earnings History
HEI Earnings History — EPS Surprise Rate 2026
Quarter
EPS Est.
EPS Actual
Surprise
Q2 2026
$1.34
$1.66
+24.2% ✓
Q1 2026
$1.29
$1.35
+4.7% ✓
Q4 2025
$1.22
$1.33
+9.3% ✓
Q3 2025
$1.14
$1.26
+10.8% ✓
Quarterly EPS — Estimate vs Actual
Earnings Projections
HEI Forward EPS Consensus Estimates 2026
Quarter
EPS Est.
YoY EPS
Analysts
Q3 2026
$1.41
+11.9%
16
Q4 2026
$1.51
+13.2%
16
Q1 2027
~$1.21
-10.4%
14
Q2 2027
~$1.61
-3.0%
20
~ Estimated from annual consensus — not a direct analyst survey
HEI — P/E 62.1x · Beta 0.95 • Quantitative grade: Reduce • CVaR from one-year daily history · historical simulation
DCF Scenario Analysis
Hover each scenario for detail · current price $348.18
▼
Bear Case
$262
-24.8%
Fwd P/E: 45.7x
8.0 revenue CAGR · 32.0 exit multiple
◆
Base Case
$385
+10.6%
Fwd P/E: 67.1x
15.0 revenue CAGR · 48.0 exit multiple
▲
Bull Case
$530
+52.2%
Fwd P/E: 92.4x
22.0 revenue CAGR · 62.0 exit multiple
Pairwise Correlation Matrix
0 of 10 peer pairs correlated above 0.60 — diversification benefit within this cluster is structurally limited.
Extended Analysis — Buy, Hold or Sell? Risk Factors. Portfolio Fit.
Is HEI a buy, hold, or sell?
HEI carries a valuation grade of Avoid. The trailing P/E of 62.1 sits 182% above the Industrials sector median of 22.0x — a premium that demands sustained earnings delivery. Our discounted cash flow model produces an intrinsic range of $232–$357 — implying a -15% margin of safety at the current price of $348.18. The width of the DCF range reflects genuine uncertainty in the terminal growth rate assumption: the correct framework is a probability-weighted distribution over scenarios, not a single point estimate. See the DCF valuation framework for full methodology.
With a 12% beat rate on recent quarters, earnings predictability has been mixed. The most recent quarter delivered a 24.2% earnings surprise. Analyst estimate revisions are trending upward.
What are HEI's key risk factors?
With a beta of 0.95, HEI exhibits a market-neutral risk profile relative to the broad market. The 95th-percentile CVaR of -20.0% on a one-month horizon should inform position sizing directly: at a 10% portfolio weight, this tail event contributes approximately 2.0% of total portfolio loss in the worst 5% of months. Net margins of 16.1% are significantly above the Industrials sector average of 11%, reflecting durable pricing power. Return on equity of 17.2% suggests solid capital efficiency. The balance sheet is conservatively leveraged at 48% debt-to-equity.
The options market shows a put/call ratio of 4.80, reflecting a notably bearish skew in derivative positioning. Implied volatility of 41.8% is below realized volatility of 48.2%, potentially making options relatively cheap. Insiders have been net sellers to the tune of $26.7M recently. While routine dispositions are common, the magnitude bears watching. Short interest is low at 1.1% of float, suggesting limited bearish conviction.
How does HEI fit in a diversified portfolio?
At typical HENRY portfolio weights — 10–20% of the equity allocation — HEI carries a beta of 0.95, meaning it amplifies broad market moves proportionally. The appropriate weight is not a function of conviction alone, but of the full covariance structure across all holdings. See the Ledoit-Wolf covariance framework for the methodology behind these calculations.
Among closely correlated names, HEI shows the strongest co-movement with RTX (0.48), GD (0.28), NOC (0.28). Investors seeking diversification should note these correlation dynamics when constructing multi-asset portfolios.
True portfolio risk is a function of the full covariance structure across all holdings — not individual stock metrics. The Portfolio Health Check quantifies this at the portfolio level: it surfaces hidden concentration, marginal CVaR contributions, and the degree to which your overall allocation deviates from an optimal risk-adjusted mandate. The HEI analysis here is a single node in that larger structure.
Heico Corporation (HEI) carries a Avoid quantitative rating from A.L. Capital Advisory, derived from Discounted Cash Flow intrinsic value analysis, five-factor model scoring (Value, Quality, Momentum, Volatility, Size), and CVaR tail risk measurement. At $348.18, the DCF midpoint margin of safety is -15% (intrinsic value range: $232 bear – $357 bull). Composite factor score: 3.2/5. Strongest factor: Quality (4.0/5). Weakest factor: Value (2.0/5). Trailing P/E: 62.1x. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Portfolio Construction Framework →
What is the average analyst target price for HEI?
Wall Street consensus target for HEI: $356.40 (+2.4% upside from the current price of $348.18). The analyst target range spans $282.00 (most bearish) to $430.00 (most bullish). Consensus recommendation: Buy. Note that analyst price targets typically reflect a 12-month forward horizon and are derived from a blend of DCF, comparable-company, and sum-of-the-parts analysis. A.L. Capital Advisory’s quantitative Avoid rating is produced independently — from DCF intrinsic value, five-factor model scores, and CVaR tail risk — and does not mechanically track Street consensus. When the two diverge, the divergence itself is informative: it can reflect differences in time horizon, valuation methodology, or the degree to which the current price already discounts the consensus case. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Monte Carlo Simulation Framework →
How does HEI score on Value, Quality, Momentum, Volatility, and Size?
HEI five-factor scores (A.L. Capital Advisory, 1–5 scale): Value 2.0/5 (below average) — measures current price versus DCF intrinsic range and trailing earnings multiples; Quality 4.0/5 (above average) — captures profitability metrics including return on equity, net margin (ROE: 17.2%) and net margin (16.1%); Momentum 3.0/5 (neutral) — reflects recent price trajectory and earnings surprise consistency; Volatility 4.0/5 (above average) — inverse measure derived from beta, where lower historical volatility earns a higher score; Size 3.0/5 (neutral) — market capitalisation rank (mega-cap $1T+ scores 5/5). Composite: 3.2/5. Factor scores above 4.0 signal a tailwind in that dimension; below 2.0 signals a material headwind. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Black-Litterman Model →
What is HEI's tail risk and CVaR?
The 95th-percentile Conditional Value at Risk (CVaR) for HEI on a one-month horizon is -20.0%. CVaR represents the expected average loss in the worst 5% of monthly outcomes — a more conservative tail risk measure than standard VaR, which only marks the loss threshold. Beta of 0.95 indicates broadly market-level volatility. For reference, a diversified S&P 500 ETF carries a one-month CVaR of roughly -8% to -12% in normal market conditions; individual equity CVaR is higher due to idiosyncratic risk. At the portfolio level, what matters is the marginal CVaR contribution of each holding — not its standalone figure. The A.L. Capital Advisory Portfolio Health Check quantifies each position's marginal tail-risk contribution across your entire holdings. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: CVaR & Tail-Risk Methodology →
What is HEI's intrinsic value and DCF price target?
A.L. Capital Advisory's DCF model produces an intrinsic value range of $232 (bear case) to $357 (bull case) for Heico Corporation (HEI). At $348.18, the midpoint margin of safety is -15% (positive = discount to intrinsic mid; negative = premium). The bear-to-bull spread reflects genuine sensitivity to the two dominant DCF inputs: the terminal growth rate and WACC. Terminal value typically accounts for 60-80% of total intrinsic value in most equity DCF models, which is why a range is more analytically sound than a point estimate. The central analytical question is not what the DCF outputs as a single number but which growth trajectory the current market price already discounts. All DCF analysis follows CFA Institute standards and is conducted by Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework →
What would trigger a rating upgrade or downgrade for HEI?
Upgrade trigger: Upgrade to Strong Buy on evidence of accelerating earnings surprise magnitude combined with improvement in the Value factor score — specifically if the current 62.1x P/E is supported by an upward revision to DCF terminal growth assumptions. Downgrade trigger: Continued earnings misses or deteriorating balance sheet quality reducing the Quality factor score below 2.0/5. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Investment Policy Statement Framework →
Does HEI consistently beat earnings estimates?
HEI has beaten consensus EPS estimates in 12% of tracked quarterly periods — indicating inconsistent delivery. The most recent reported quarter beat consensus by 24.2%. Below-average earnings consistency is a primary headwind to the rating and a key watch item in the quantitative model. Earnings surprise magnitude and direction are incorporated into the Momentum and Quality dimensions of the five-factor scoring model. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework →
How does HEI contribute to portfolio risk and diversification?
HEI carries a beta of 0.95 (moderate-volatility relative to the broad equity market). A beta above 1.0 means the position amplifies market moves in both directions at a typical portfolio weight. Strongest peer co-movement: RTX (0.48), GD (0.28), NOC (0.28). Holding HEI alongside these names in the same portfolio increases concentration risk. True portfolio risk is a function of the full covariance structure — a single stock's beta does not reveal its marginal contribution to portfolio tail loss. The A.L. Capital Advisory Portfolio Health Check quantifies concentration risk (Herfindahl-Hirschman Index), pairwise correlations, and marginal CVaR contribution across all your holdings. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Ledoit-Wolf Covariance Framework →
What quantitative methodology does A.L. Capital Advisory use to analyse HEI?
A.L. Capital Advisory analyses Heico Corporation (HEI) using a four-component quantitative framework grounded in CFA Institute standards. (1) DCF Valuation: projects free cash flows under bear and bull assumptions, discounts at WACC to produce an intrinsic value range with margin-of-safety calculation. (2) Five-Factor Scoring: each equity is scored 1–5 on Value, Quality, Momentum, Volatility, and Size. (3) CVaR Tail Risk: 95th-percentile Conditional Value at Risk from historical simulation of daily returns on a one-month horizon. (4) Earnings Surprise Analysis: quarterly beat rate and magnitude are incorporated into the Momentum and Quality factor scores. The current Avoid rating for HEI is the output of applying this complete framework to current data. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework → · CVaR & Tail-Risk Methodology →
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This analysis is produced using a systematic quantitative framework applied to market data and does not constitute investment advice. Prose commentary is AI-assisted and generated from structured quantitative inputs. All data and metrics are as of 2026-05-30 and are point-in-time estimates subject to revision without notice. CVaR figures are based on historical simulation and do not guarantee future outcomes. DCF ranges and upgrade/downgrade triggers are forward-looking statements based on current assumptions and may not materialise. Past performance does not guarantee future results. This analysis does not account for individual circumstances, tax position, or investment objectives — consult a qualified financial advisor before making investment decisions. This content is intended for informational purposes only and does not constitute regulated investment advice under MiFID II or FCA guidelines. This content is not intended for US persons or residents of jurisdictions where its distribution would be contrary to local law or regulation. This service is not directed at residents of Finland, Sweden, Norway, Denmark, Iceland, or Poland. The author may hold long or short positions in securities mentioned in this analysis. Nothing on this page represents a solicitation to buy or sell any security. A.L. Capital Advisory is an independent private advisory practice and is not affiliated with Heico Corporation.
CFA Portfolio Advisory — HEI
Discuss this analysis, position sizing, or your full portfolio mandate with Anton Ladnyi, CFA.
