Heico (HEI.A:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Heico(HEI.A:NYS)

Industrials:Aerospace & Defense

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$60.41 (USD) 02/01/2019

Weighted Valuation
$76.73 (USD)

Overall Rating
Undervalued by 27.0%

Valuation Models Analyst Consensus: $96.25 (USD)
(in order of importance) Discounted Cash Flow: $61.49 (USD)
Adjusted Book Value: $48.66 (USD)
Valuation Methods This company is:
Cash Flow: Fairly valued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (HEI.A:NYS USD)

Price 60.41
Range 60.03 – 62.52
52 week 48.96 – 77.05
Open 62.02
Vol / Avg. 281543/276814
Mkt cap 8.86B
P/E 33.82
Div/yield 0.12/0.00
EPS 1.90
Shares 132.93M
Beta 0.74

Company Description

Heico Corp manufactures jet engines and aircraft components. It also supplies electronic equipment for agencies and contractors. Its Flight Support segment uses proprietary technology to design engines and parts for commercial and military aircrafts. The company provides maintenance and repairs globally and can provide services on engines and parts supplied by another company. Its Electronic Technologies segment provides defense and communication equipment to United States and other military agencies. It designs and implements mission-critical subcomponents to perform tests, targeting, and other functions. Each segment independently conducts marketing efforts through in-house personnel and independent manufacturers’ representatives.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for HEI.A:NYS

Using a discounted cash flow model we generated an intrinsic value of $61.49 (USD) for HEI.A:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

HEI.A:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $61.49 1% 5% 1% 5%
WACC (or Ke) 7.55 $78.11 $50.45
Terminal Growth Rate 2.60 $51.43 $76.64
Tax Rate 0.20 $65.65 $57.34
Cash Flow 594,977,400 $58.16 $64.82
Capital Expenditures 0 $61.49 $61.49
Long Term Debt 509,905,000 $61.68 $61.30

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $26.47 (USD) for HEI.A:NYS. We also generated a valuation of $31.23 (USD) using other metrics and comparables.
The comparable companies were Esterline Technologies (ESL:NYS), Huntington Ingalls Indus (HII:NYS), L3 Technologies (LLL:NYS), Moog (MOG.A:NYS) and Textron (TXT:NYS).

Company HEI.A:NYS End Date Value
Earnings/Share $1.90 (USD)
Book Value/Share $10.52 (USD)
Sales/Share $13.00 (USD)
Cash Flow/Share $2.40 (USD)
EBITDA/Share $3.32 (USD)
Price Based on Comps Adjustment Factor (%)
$46.89 (USD) -9.1
$27.52 (USD) -33.8
$15.81 (USD) 84.9
$35.94 (USD) -79.9
$34.41 (USD) 12.3
HEI.A:NYS Ratios Used Average Values ESL:NYS HII:NYS LLL:NYS MOG.A:NYS TXT:NYS
33.16 PE Ratio 24.68 52.35 12.22 16.43 28.91 13.49
5.99 PB Ratio 2.62 1.97 4.48 2.42 2.20 2.02
4.84 PS Ratio 1.22 1.77 1.06 1.38 1.03 0.84
26.22 PCF Ratio 16.58 16.87 12.08 17.54 27.28 9.11
21.22 EV to EBITDA 10.37 13.39 7.61 12.64 11.12 7.10

Multiples

Using a multiples approach we generated a valuation of  $48.66 (USD) for HEI.A:NYS

Company HEI.A:NYS End Date Value
Earnings/Share $1.90 (USD)
Book Value/Share $10.52 (USD)
Sales/Share $13.00 (USD)
Cash Flow/Share $2.40 (USD)
EBITDA/Share $3.32 (USD)
Price Based on Comps Adjustment Factor
$54.18 (USD) 0
$50.26 (USD) 0
$41.96 (USD) 0
$45.21 (USD) 0
$51.71 (USD) 0
Ratios Ratio Average
PE Ratio 28.52
PB Ratio 4.78
PS Ratio 3.23
PCF Ratio 18.81
EV to EBITDA 15.59

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  HEI.A:NYS for the last 10 years was  4.63

We ran the Adjusted Book Value for  HEI.A:NYS and generated a book value of  $10.52 (USD)
By multiplying these we get an adjusted valuation of  $48.66 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for HEI.A:NYS. The 4 analysts have a concensus valuation for HEI.A:NYS for 2019 of $96.25 (USD).

HEI.A:NYS Heico

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 2 0 4.0000 Outperform 2019-1-1

Current Price: 60.41 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 2.07 2.33 2.58
# EPS Analysts 4 3 2
Mean Revenue 1,944.10 2,077.50 2,239.90
# Revenue Analysts 4 3 2
Mean Target Price 96.25
Mean Cash Flow 2.71 2.98 3.30
Mean EBITDA 499.00 539.30 579.90
Mean Net Income 292.00 318.90 346.20
Mean Debt Outstanding 330.40 275.50 247.10
Mean Tax Rate 22.20 19.50
Mean Growth Rate 19.10
Mean Capital Expenditure 45.90 47.00 47.60

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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