A month has gone by since the last earnings report for Heico Corporation (HEI Quick QuoteHEI - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Heico Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

HEICO Corp. Q1 Earnings & Sales Surpass Estimates

HEICO Corporation reported first-quarter fiscal 2021 earnings of 51 cents per share, which surpassed the Zacks Consensus Estimate of 46 cents by 10.9%. The bottom line however declined 42.7% from the prior-year quarter’s figure of 89 cents.

Total Sales

Quarterly net sales of $417.9 million beat the Zacks Consensus Estimate of $405 million by 3.24%. The top line however declined 17.5% from the year-ago quarter’s figure of $506.3 million. The downfall took place as the demand for its commercial aerospace products and services were negatively impacted in the first quarter of fiscal 2021 mainly due to the continued suppressed demand in global commercial air travel.

Operational Update

HEICO’s total costs and expenses declined 14.6% year over year to $337.6 million in the quarter under review. The decline was due to lower cost of sales as well as low selling, general and administrative expenses.

Segmental Performance

Flight Support Group: Net sales plunged 33.8% year over year to $199.3 million primarily due to lower demand for the majority of its commercial aerospace products and services.

Operating income also plunged 58.4% year over year to $25.8 million, courtesy of a decrease in net sales as well as a lower gross profit margin and the impact from lost fixed cost efficiencies arising from the pandemic.

Further, its operating margin contracted 760 basis points (bps) to 13% year over year, in the first quarter of fiscal 2021.

Electronic Technologies Group: Net sales increased 7% year over year to $223.6 million primarily owing to the favorable impact from its fiscal 2020 acquisitions.

Operating income increased 5% year over year to $60.1 million, primarily on account of quarterly net sales growth.

However, the company’s operating margin came down 70 bps to 26.9% in the first quarter of fiscal 2021.

Financial Details

As of Jan 31, 2021, cash and cash equivalents totaled $399.4 million compared with $406.8 million as of Oct 31, 2020.

Long-term debt (net of current maturities) totaled $668.6 million as of Jan 31, 2021, up from $738.8 million as of Oct 31, 2020.

Cash flow provided by operating activities remained strong, increasing 32% to $107.2 million in the first quarter of fiscal 2021, up from $81.1 million in the first quarter of fiscal 2020.

Fiscal 2021 Guidance

HEICO Corp has not provided fiscal 2021 net sales and earnings due to the uncertainties caused by the prolonged Covid-19 pandemic.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -5.26% due to these changes.

VGM Scores

At this time, Heico Corporation has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Heico Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.