Shares of HEICO Corporation (HEI - Snapshot Report) hit a 52-week high of $58.53 during yesterday’s trading session. However, the stock closed at $58.00 reflecting a solid year-over-year increase of 75.5%. The average trading volume for the last three months aggregated 142,639 shares.
HEICO Corporation delivered positive earnings surprises in three of the last four quarters with an average beat of 4.0%. This Zacks Rank #2 (Buy) stock has a market cap of $3.7 billion and long-term earnings growth expectations of 13.5%.
HEICO Corporation has been witnessing rising earnings estimates on the back of strong fiscal third-quarter 2013 results, strategic acquisitions, expanded credit facility and stock splits.
On Aug 27, HEICO Corporation reported fiscal third-quarter results. Non-GAAP earnings per share came in at 48 cents, beating year-ago earnings of 43 cents by 11.6%. Earnings were primarily aided by solid top-line growth of 18.0%, driven by growth across its segments.
In addition, the company completed the strategic acquisition of Lucix Corporation for an undisclosed sum. This acquisition expands HEICO Corporation’s satellite and space component operations, and is accretive to first-quarter 2014 earnings.
Subsequent to the quarter-end, HEICO Corporation completed the pre-announced 5-for-4 stock split. This stock split primarily reflects the company’s optimism related to long-term growth and financial outlook. Over the past 13 years, HEICO Corporation has consistently delivered strong returns and value to its shareholders. Due to the impact of prior increases in cash dividends, earlier stock splits and stock dividends, one share of HEICO Corporation worth $8.38 in 1990 is valued at approximately $900 today, an increase of 107 times from the 1990 value. It has also experienced a compound annual growth rate of 23%.
HEICO Corporation has also expanded its revolving credit facility to $1 billion on an aggregate basis besides extending its maturity till the end of 2018. This revised credit facility is expected to increase the company’s financial flexibility to support its capital structure and operations across the world.
Further, driven by management’s confidence in the company’s business, the board intends to increase the regular semi-annual cash dividend to 6 cents per share, representing a 7% increase over the prior semi-annual tally of 60 cents, as adjusted for the 5-for-4 stock splits.
Over the last 7 days, the earnings estimates did not show any upward or downward revision for 2013. Although there is a lacuna of estimate revisions, we envision an uptrend for the stock backed by its strong growth potential.
Other Stocks to Consider
Other companies in the aerospace and defense sector worth considering at the moment include Alliant Techsystems Inc. , Hexcel Corp. (HXL - Snapshot Report) and Teledyne Technologies Inc. (TDY - Snapshot Report). While Alliant Technologies has a Zacks Rank #1 (Strong Buy), Hexcel and Teledyne both carry a Zacks Rank #2 (Buy).