What HEICO’s Impressive 33% Rally in 2025 Means for Its True Value

• Ever wonder if HEICO is actually a bargain or just another expensive stock on the market? You are not alone. Investors are keeping a close eye on what really drives its value.
• HEICO's stock price has been on a noteworthy run, up 2.5% in the past week and an impressive 32.9% year-to-date, with long-term gains of 144.5% over five years.
• The recent momentum has not just come out of nowhere, as industry M&A activity and new contract awards have fueled optimism about HEICO’s growth opportunities. This fresh wave of developments has sparked renewed debate over the company’s true worth and future prospects.
• As for valuation, HEICO currently scores 2 out of 6 in our basic checks for undervaluation, setting the stage for a deeper look at how to measure value. This also hints there is an even smarter approach to valuation that we will explore by the end of the article.

HEICO scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: HEICO Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its expected future cash flows and then discounting those amounts back to today’s terms. This approach helps assess what a business might really be worth versus market expectations.

For HEICO, recent Free Cash Flow stands at $779.95 Million, highlighting the company’s ability to generate significant cash for shareholders. Analysts forecast strong growth ahead, projecting Free Cash Flow to reach $1.72 Billion in 2029. Notably, while the first five years of these projections are rooted in analyst estimates, further-out numbers are extrapolated based on current trends and industry assumptions.

Based on these cash flow forecasts, the DCF method calculates an estimated fair value of $331.18 per share for HEICO. Comparing this intrinsic value with the current trading price suggests the stock is about 4.8% undervalued. This represents a small but notable margin in today’s market climate.

Result: ABOUT RIGHT

HEICO is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for HEICO.

Approach 2: HEICO Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation measure for profitable companies like HEICO because it directly compares the price investors are willing to pay for each dollar of earnings. This makes the PE ratio particularly useful for understanding whether a company's shares are expensive or fairly priced relative to its earnings power.

What counts as a “normal” PE ratio varies depending on growth expectations and risk. Companies with higher growth prospects or lower risk typically command higher PE ratios since investors anticipate stronger future earnings. Conversely, if growth or predictability is lacking, lower PE ratios are warranted.

HEICO currently trades at a PE ratio of 68.4x, just shy of the peer group average of 69.6x and well above the Aerospace & Defense industry average of 38.4x. However, Simply Wall St's proprietary Fair Ratio for HEICO is 29.6x. This figure reflects a blend of factors including earnings growth, profitability, risk, and company size. The Fair Ratio goes beyond basic peer and industry comparisons by accounting for what makes HEICO unique, such as its consistent profit margins, industry tailwinds, and company-specific risks.

Comparing the current PE with the Fair Ratio reveals that HEICO’s valuation is significantly higher than justified by its fundamentals. As a result, the stock appears to be trading above its fair value on earnings multiples.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your HEICO Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your own story or perspective about a company’s future, where you combine what you know, such as revenue forecasts or margin expectations, with your fair value estimate, all in one place. This approach links the company’s business realities to numbers and then to what you think the stock is worth, keeping your investment decision grounded both in facts and in your outlook.

Available to everyone on Simply Wall St’s Community page, Narratives are easy to use and update dynamically as fresh news or earnings releases emerge. They help you see the relationship between your Fair Value and the current Price, and, importantly, you can sense check your narrative against others in the community.

For example, around HEICO, some investors might assume strong ongoing demand for aftermarket aerospace parts and set bullish fair values close to $400 a share, while others remain cautious, highlighting risks from competition and regulatory shifts and assigning fair values nearer $270. This shows that with Narratives, you get both context and confidence for your decisions, all in one place.

Do you think there's more to the story for HEICO? Head over to our Community to see what others are saying!

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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