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Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at HEICO Corporation’s (NYSE:HEI) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
How Did HEI’s Recent Performance Stack Up Against Its Past?
HEI’s trailing twelve-month earnings (from 31 October 2018) of US$259m has jumped 39% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 18%, indicating the rate at which HEI is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is merely owing to industry tailwinds, or if HEICO has experienced some company-specific growth.
In terms of returns from investment, HEICO has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 11% exceeds the US Aerospace & Defense industry of 6.8%, indicating HEICO has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for HEICO’s debt level, has increased over the past 3 years from 15% to 16%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 48% to 33% over the past 5 years.
What does this mean?
Though HEICO’s past data is helpful, it is only one aspect of my investment thesis. While HEICO has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research HEICO to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HEI’s future growth? Take a look at our free research report of analyst consensus for HEI’s outlook.
- Financial Health: Are HEI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 October 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.