Heico Corporation Common Stock (HEI)

FairStock Score: 42/100 — MIXED

Key Financials

Strengths

• Generates $691 million in annual free cash flow (1.8% yield on market cap)
• Solid return on equity of 16.6% above cost of capital
• Altman Z-Score of 6.7 confirms minimal bankruptcy risk and strong solvency
• Established organization with 11,100 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($61) with negative 344% margin of safety—limited downside protection
• Weak Piotroski F-Score of 3/9 suggests deteriorating financial quality across multiple dimensions

AI Analysis

Heico Corporation Common Stock is a mid-cap industrials company valued at $37.5 billion. The business generates $4.6 billion in annual revenue with a 4.1% net margin and $691 million in free cash flow. From a quality standpoint, Heico shows weak Piotroski F-Score of 3/9 signaling deteriorating fundamentals and Altman Z-Score of 6.7 confirms fortress-level solvency. On valuation, the stock is commanding a steep 53.2x multiple, with trades far above its Graham Number ($61) with no margin of safety. Growth dynamics show revenue growing at 14.4% and profit growth of 13.2%. Our composite FairStock Score of 42/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $691 million in annual free cash flow (1.8% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 53x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer