HEICO High P/E Reassessed: Neutral Upgrade
Reassessing HEICO’s Persistent High P/E Ratio: Now Upgrading to Neutral
The author admits to a change in perspective regarding HEICO Corporation (NYSE: HEI), a company in the aftermarket aircraft parts sector known for its solid operations.
Previously, the high price-to-earnings ratio hovering around 60 has been a persistent challenge to justify. While the business model is attractive and reliable, it does not compare to the explosive growth seen in fields like artificial intelligence.
HEICO aims for growth rates between 15% and 20%, which it often meets or exceeds. However, the company remains unconcerned if it occasionally falls short of these targets, reflecting confidence in its steady performance.
Current business conditions remain robust, consistent with HEICO’s track record. Despite this strength, the growth trajectory still appears insufficient to fully warrant the elevated P/E multiple observed in the stock.
The firm has demonstrated remarkable prowess as an acquirer, consistently integrating new businesses with skill. Nevertheless, even this acquisition-driven expansion has not yet provided enough momentum to align with the stock’s premium valuation.
Returning to a fundamental valuation analysis, the author discovered a key oversight from prior assessments. When factoring in HEICO’s superior business quality, strong operating margins, minimal risk profile, and disciplined growth approach, the P/E ratio presents a far more compelling picture.
This revised viewpoint supports shifting the rating from a previous sell or avoid stance to a more balanced ‘Neutral’ or ‘Hold’ recommendation, acknowledging the company’s merits while recognizing ongoing valuation considerations.
The analysis draws from extensive coverage, including initial initiation on September 24, 2025, and subsequent updates on December 24, 2024, and August 29, 2025, where concerns over the premium pricing dominated despite admiration for the business moat and execution.
HEICO’s success stems from a terrific business model that has delivered spectacular results over time, prompting the author to reconsider entrenched views through reflection and revision.
