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Heico Corporation (HEI) Down 4.9% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Heico Corporation (HEI - Free Report) . Shares have lost about 4.9% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
HEICO Corporation’s third-quarter fiscal 2023 earnings per share (EPS) of 77 cents beat the Zacks Consensus Estimate of 74 cents by 4.1%. The bottom line also improved 28.3% from the prior-year period’s 60 cents.
Total Sales
The company’s net sales increased 27% year over year to $722.9 million in the reported quarter, primarily driven by an improvement in the commercial aerospace market. Total sales also beat the Zacks Consensus Estimate of $697 million by 3.7%.
Operational Update
HEICO’s total costs and expenses increased 29.4% year over year to $573.5 million in the quarter under review. The rise was due to the higher cost of sales and SG&A expenses.
Segmental Performance
Flight Support Group: Net sales surged 23% year over year to $405 million. This hike was driven by the increased demand for the majority of its commercial aerospace products and services, resulting from the continued recovery in global commercial air travel.
The operating income soared 26% year over year to $89.2 million. This increase was due to solid net sales growth and an improved gross profit margin. Further, its operating margin expanded by 60 basis points (bps) to 22% compared with 21.4% in the prior-year period.
Electronic Technologies Group: The segment’s net sales increased 33% to $325.9 million, primarily due to the increased demand for its products and net sales contributions from the acquisitions made by the company.
The segment’s operating income improved 9% year over year to $74.2 million, primarily driven by higher net sales volumes. The company’s operating margin contracted by 510 bps to 22.8%.
Financial Details
As of Jul 31, 2023, HEI’s cash and cash equivalents totaled $694.3 million compared with $139.5 million as of Oct 31, 2022.
Cash flow provided by operating activities was $300.4 million during the nine months preceding Jan 31, 2023, highlighting a 7.3% decline from the prior-year period.
HEICO reported long-term debt (net of current maturities) of $1,198.5 million as of Jul 31, 2023, up from $288.6 million as of Oct 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Heico Corporation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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.
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Heico Corporation (HEI) Down 4.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Heico Corporation (HEI - Free Report) . Shares have lost about 4.9% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
HEICO Q3 Earnings Beat Estimates, Sales Increase Y/Y
HEICO Corporation’s third-quarter fiscal 2023 earnings per share (EPS) of 77 cents beat the Zacks Consensus Estimate of 74 cents by 4.1%. The bottom line also improved 28.3% from the prior-year period’s 60 cents.
Total Sales
The company’s net sales increased 27% year over year to $722.9 million in the reported quarter, primarily driven by an improvement in the commercial aerospace market. Total sales also beat the Zacks Consensus Estimate of $697 million by 3.7%.
Operational Update
HEICO’s total costs and expenses increased 29.4% year over year to $573.5 million in the quarter under review. The rise was due to the higher cost of sales and SG&A expenses.
Segmental Performance
Flight Support Group: Net sales surged 23% year over year to $405 million. This hike was driven by the increased demand for the majority of its commercial aerospace products and services, resulting from the continued recovery in global commercial air travel.
The operating income soared 26% year over year to $89.2 million. This increase was due to solid net sales growth and an improved gross profit margin. Further, its operating margin expanded by 60 basis points (bps) to 22% compared with 21.4% in the prior-year period.
Electronic Technologies Group: The segment’s net sales increased 33% to $325.9 million, primarily due to the increased demand for its products and net sales contributions from the acquisitions made by the company.
The segment’s operating income improved 9% year over year to $74.2 million, primarily driven by higher net sales volumes. The company’s operating margin contracted by 510 bps to 22.8%.
Financial Details
As of Jul 31, 2023, HEI’s cash and cash equivalents totaled $694.3 million compared with $139.5 million as of Oct 31, 2022.
Cash flow provided by operating activities was $300.4 million during the nine months preceding Jan 31, 2023, highlighting a 7.3% decline from the prior-year period.
HEICO reported long-term debt (net of current maturities) of $1,198.5 million as of Jul 31, 2023, up from $288.6 million as of Oct 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Heico Corporation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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.