HEICO (HEI) Q4: Margin Expansion to 15.4% Reinforces Bullish Profitability Narrative

HEICO (HEI) just wrapped up FY 2025 with fourth quarter revenue of about $1.2 billion and basic EPS of $1.35, capping a trailing twelve month run that saw revenue reach roughly $4.5 billion and EPS hit $4.97 alongside a net income of $690 million. Over the last year, the company has seen revenue climb from about $3.9 billion to $4.5 billion, while basic EPS stepped up from $3.71 to $4.97 in the trailing figures, signaling a business that is translating top line expansion into healthier margins.

See our full analysis for HEICO.

With the latest numbers on the table, the next step is to see how this margin story lines up with the most widely held narratives around HEICO and where the data might be starting to tell a different tale.

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Margins Push Higher With 15.4% Net Profit

• On a trailing basis HEICO converted $4.5 billion of revenue into $690 million of net income, taking net profit margin to 15.4 percent from 13.3 percent a year earlier.
• What stands out to the bullish view that HEICO can expand margins over time is that this 15.4 percent net margin is rising alongside both revenue and EPS. This fits the story of strong demand for aftermarket parts and acquisitions driving higher operating and EBITA margins. However, it also leaves less room for error if mix shifts, because recent margin strength is acknowledged as partly helped by favorable business mix that may not repeat every year.
  • Trailing EPS climbed from 3.71 dollars to 4.97 dollars over roughly the last year while trailing revenue increased from about 3.9 billion dollars to 4.5 billion dollars, so margin gains are happening at the same time as top line growth.
  • Bulls point to aging fleets and growing defense spending as long term supports for margins, but the data also shows forecasts for earnings growth slowing to about 12 percent per year, which is below the 34.3 percent growth of the last year and suggests the recent pace is not assumed to be permanent.

Over the last few years, bulls say HEICO has quietly built a margin engine on aging fleets and defense demand, and this latest step up in profitability could be the proof point they were waiting for. 🐂 HEICO Bull Case

Growth Still Strong, But Forecasts Ease Back

• Trailing earnings have grown 18.6 percent per year over five years and jumped 34.3 percent over the last year, yet forward looking estimates in the data show revenue growth easing to about 7.5 percent per year and earnings growth to roughly 12 percent per year, both below the cited broader US market forecasts of 10.5 percent and 16 percent.
• Bears who worry that HEICO leans too much on acquisitions and favorable industry conditions get some support here, because the forecast step down from 34.3 percent recent earnings growth to around 12 percent projected growth matches the narrative risk that current drivers might be hard to repeat if competition tightens or next generation aircraft need fewer replacement parts.
  • Quarterly numbers already show a more measured pace, with FY 2025 revenue moving from about 1.03 billion dollars in Q1 to roughly 1.21 billion dollars in Q4 and net income from about 168 million dollars to 188 million dollars, which is healthy but less dramatic than the trailing growth rates.
  • Consensus narrative also flags intensifying OEM competition and evolving aircraft technology as threats to aftermarket demand, and the moderation in growth forecasts lines up with that more cautious long term stance even as current profitability looks solid.

After such a strong year of earnings acceleration, skeptics are asking whether HEICO’s growth is already past its peak or just normalizing. 🐻 HEICO Bear Case

Rich Multiple Versus Industry Despite Near Fair Value

• HEICO trades at about 65.9 times trailing earnings, which is lower than the peer group average of 74.2 times but notably higher than the US Aerospace and Defense industry at 36.5 times, while the share price of 326.67 dollars sits almost exactly at a 326.92 dollar DCF fair value and just under the 355.65 dollar analyst price target.
• For bullish investors who see the premium multiple as justified by consistent growth, the numbers partly back that up, but they also highlight the valuation risk bears focus on, because net margin improvement to 15.4 percent and long term earnings growth of 18.6 percent per year are already reflected in a multiple that is almost double the wider industry and comes with a high debt load called out as a risk in the analysis.
  • The near match between the 326.67 dollar share price and the 326.92 dollar DCF fair value suggests the market is not ignoring fundamentals, it is consciously paying up for HEICO relative to the sector.
  • At the same time, with forecasts calling for about 12 percent annual earnings growth versus 16 percent for the broader US market, investors are effectively paying a sector premium for a company that is not expected to grow faster than the market averages in the data provided. Next Steps

    To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for HEICO on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

    See the numbers from another angle? Use that viewpoint to build your own narrative in just a few minutes and shape how the story unfolds, Do it your way.

    A great starting point for your HEICO research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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    HEICO’s premium valuation, moderating growth outlook and elevated leverage mean investors are paying up for a story that may not outpace the broader market.

    If that trade off feels unbalanced, use our solid balance sheet and fundamentals stocks screener (1945 results) to quickly spot companies with cleaner finances and stronger cushions that can better support growth through the next downturn.

    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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