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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Heico Corporation (XNYS:HEI) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
HEI
Name:
HEICO CORPORATION (XNYS:HEI)
Sector:
69.29M
Industry:
Aerospace & Defense
CEO:
Mr. Laurans Mendelson
Total Employees:
5,600
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -165.43% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF HEICO CORPORATION(HEI) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND AEROSPACE & DEFENSE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
152.22
One Month Price Target:
$153.21
Six Month Price Target :
$158.18
Likely Price in One Year's Time:
Ticker:
$164.13
Likely Trading Range Today Under (Normal Volatility)
$151.66
Price Upper limit ($) :
$152.97
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$144.41
This week:
$134.76
This month :
$117.3
Other Primary facts
Market Cap:
18.34B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
136.59M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
12.56%
-16.38%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$188.44
$171.77
$116.00
$132.67
Medium risk (<10%) entry points
Buy Call
Sell Call
$166.34
Buy Put:
Sell Put:
$162.78
$138.06
$141.66
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
HEI
Sharpe Ratio:
2.09%
Comparison:
HEI, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 92.87% higher than the industry
& is -8.20% lower than the market/S&P 500 average
Average Returns/Yield of
HEI
Daily returns:
0.06%
Weekly returns:
0.31%
Monthly returns:
1.23%
Yearly returns:
10.44%
Comparison of returns:
Average annual returns/yield (last 3 years) is 41.90% above industry average
Classification:
HEI, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.61
Statistical test of Returns:
HEI has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.53%
Weekly Volatility:
5.65%
Monthly Volatility:
11.30%
Yearly Volatility:
39.16%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.93%
Volatility in last five trading days has been -63.27% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.13%
Weekly VaR:
-11.47%
Monthly VaR:
-22.94%
How Much Can the price of
HEI
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-20%
Worst case (decline):
-79.47%
This translates to price declining to:
$122.42
This translates to price declining to:
$31.26
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
HEI is a 61.91% riskier investment compared to the market/S&P 500 & is 38.71% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -19.95% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
HEI
Beta in relation to market/S&P 500--1.16
Expected beta in 1 year's time:
0.749
Expected beta in 3 year's time:
1.06
Unlevered (debt free) Beta:
1.073
Beta in relation to Nasdaq (XNAS):
0.793
Beta in relation to all global stocks::
0.779
Beta Comparison & Analysis
Beta of competitors/peers::
1.301
Beta is -10.50% lower than peers
Average Industry Beta:
1.007
Beta is 15.67% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
13.71%
Sustainable growth rate is -31.22% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.037
Alpha is 834.78% above industry average alpha yield
Alpha is 235% higher than market/& is unsustainably high
Analysis of Cost of Capital of
HEI
Equity cost of capital:
0.111
Equity cost of capital is 10.76% above industry mean WACC
Unlevered (without debt) cost of capital:
10.25%
Before-tax cost of debt:
1.91%
After-tax cost of debt:
1.51%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.51%
WACC is 31.75% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$14.72
Revenue growth rate per share of (3Y):
8.88
Annual revenue growth rate is -96.83% below industry average
EPS:
$2.43
Expected Annual growth rate of EPS (3Y):
-1.80%
Expected future EPS growth rate is -123.81% lower than the Aerospace & Defense industry
Free cash flow (FCF) per share:
$2.74
Balance sheet equity growth per share: 46.64%
Equity growth rate per share is -26947.32% lower than the industry
Debt per share
$1.73
EBITDA per share
$3.68
Valuation Analysis Today of
HEI
P/E Ratio:
61.56
P/E Ratio of Competitors/Peers:
24.42
P/E ratio is 152.05% higher than main peers & is 30.99% higher than the industry
Stock price/value with industry average P/E ratio: $114.19
HEI is 33.30% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $15.77
Present value of the expected future dividends only: $4.16
P/S (Price to Sales ratio):
10.34
Price to sales ratio is 8.78% above the industry mean
P/B (Price to book value ratio):
8.88
Price to free cash flow: 55.57
Price to free cash flow ratio is -16.29% lower than the industry
Net income growth rate (3Y):
14.94%
Net income growth rate is 393.49% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 3.65%
Dividend yeild: 0.23%
Previous Dividend: $0.09
Previous adjusted dividend: $0.09
Previous Dividend: $0.35
Expected next dividend best case: $0.10
Expected next dividend worst case: $0.08
Average dividend payment (long-term): $0.09
Average dividend increase/decrease (growth rate) % per period: 2.50%
Expected next dividend payment date: 13/10/2022
Expected next dividend record date: 29/09/2022
-
Previous dividend payment date: 15/07/2022
Previous dividend record date: 07/01/2022
-
Dividend History:
2022-06-30--$0.09
2021-06-30--$0.09
2020-06-30--$0.08
2022-01-05--$0.09
2021-01-06--$0.08
2020-01-08--$0.08
Dividend growth rate is -118.91% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
10.22%
Net debt to equity ratio:
4.87%
Debt to assets ratio:
6.71%
Net debt to assets ratio:
3.20%
Debt-to-asset ratio is -87.50% below industry average
Ability to repay debt:
Interest coverage ratio:
111
Interest coverage ratio is 1234.68% more than industry average
Looking forward:
Debt growth rate:
-66.79%
Annual debt growth is -173% lower than industry average debt growth rate
Debt repayment rate in last quarter: 9.59%
Analysis of Key Statistics
Correlation of price movement with the market:
0.669
Statistical significance of correlation:
HEI has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.541
Stock price is 23.56% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.541
Correlation of price movement with Nasdaq (^IXIC):
0.033
Covariance of price movement with the market:
0.049
Kurtosis
6.148
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.065
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
HEI
Gross Profit Margin Ratio:
157%
Operating Profit Margin Ratio:
21.76%
Operating profit margin is -104.37% lower than the industry
Net Profit Margin Ratio:
157%
Effective Tax Rate:
16.32%
Effective tax rate is -31.22% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
14.53%
Return on equity (ROE) is 83.39% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
9.53%
Return on assets (ROA) is 123.16% higher than the industry
Financial Leverage:
1.1x
Current Ratio:
3.56
Current ratio is 12.39% above industry average
Cash Conversion Cycle (days):
53.8
Cash conversion cycle is -90.66% below industry average
The remaining useful life of property plant & equipment is: 13.2 years
Stock based compensation to net income ratio:
1.08%
In-depth Efficiency Analysis
Revenue generated per employee:
359.0K
Each employee generates 4% more revenue than industry average revenue per employee
EBITDA generated per employee:
89.8K
Each employee generates 140% more EBITDA than industry average revenue per employee
Profit generated per employee:
59.8K
Each employee generates 830% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
12.4K
Each employee generates -633% less free cash flow than industry average revenue per employee
Assets/Capital per employee
453.5K
Each employee generates -633% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
HEI
HEI-A
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION (XNYS:WAB)
JACOBS SOLUTIONS INC. (XNYS:J)
AVERY DENNISON CORPORATION (XNYS:AVY)
IDEX CORPORATION (XNYS:IEX)
TEXTRON INC. (XNYS:TXT)
KSU-P
XYLEM INC. (XNYS:XYL)
AerCap Holdings NV (XNYS:AER)
Current Analyst Ratings
Strong buy�8%
Buy�17%
Hold�17%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
4/30/22
Revenue:
2.01B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.22B
790.66M
-
-
353.19M
-
-
353.19M
-
4.53M
93.81M
502.72M
437.47M
334.88M
425.80M
69.50M
334.88M
Statement of Cash Flow
Date:
Period:
23.22M
Differed Income Tax :
- 322.00K
Stock Based Compensation :
3.61M
Change in Working Capital :
- 46286.00K
Accounts Receivables:
16.19M
Other Working Capital:
11.60M
Other Non-Cash Items:
10.83M
Net Cash Provided by Operating Activities:
77.98M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
3.17M
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
1/31/22
2022
Q1
124.82M
-
124.82M
310.07M
503.51M
36.17M
974.56M
194.60M
1.45B
566.09M
-
-
332.39M
2.54B
-
3.51B
89.01M
1.48M
2.03M
-
183.39M
273.88M
235.65M
622.07M
897.96M
-
1.17B
1.36M
2.02B
- 16962.0K
302.10M
January 31, 2022 at 7:00:00 AM
1.57B
2.31B
3.48B
-
237.13M
112.3M
-
- 23124.00K
- 19959.00K
- 25000.00K
-
-
- 12227.00K
- 2693.00K
- 39920.00K
- 1581.00K
16.52M
124.82M
108.30M
77.98M
- 8691.00K
69.29M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
HEI
2023
2024
2025
2026
2027
$153.87
$165.92
$178.90
$192.90
$208.00