Heico (HEI) Gains But Lags Market: What You Should Know

In the latest trading session, Heico (HEI) closed at $142, marking a +0.56% move from the previous day. This change lagged the S&P 500's 1.5% gain on the day. Elsewhere, the Dow gained 1.48%, while the tech-heavy Nasdaq added 1.95%.

Heading into today, shares of the defense and aerospace contractor had gained 4.04% over the past month, outpacing the Aerospace sector's loss of 1.4% and the S&P 500's loss of 4.19% in that time.

Wall Street will be looking for positivity from HEI as it approaches its next earnings report date. This is expected to be August 27, 2019. In that report, analysts expect HEI to post earnings of $0.53 per share. This would mark year-over-year growth of 8.16%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $513.73 million, up 10.28% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.24 per share and revenue of $2.01 billion. These totals would mark changes of +23.76% and +13.29%, respectively, from last year.

Any recent changes to analyst estimates for HEI should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 1.2% higher. HEI is currently a Zacks Rank #2 (Buy).

In terms of valuation, HEI is currently trading at a Forward P/E ratio of 62.99. This valuation marks a premium compared to its industry's average Forward P/E of 22.73.

It is also worth noting that HEI currently has a PEG ratio of 4.52. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Aerospace - Defense Equipment stocks are, on average, holding a PEG ratio of 2.02 based on yesterday's closing prices.

The Aerospace - Defense Equipment industry is part of the Aerospace sector. This industry currently has a Zacks Industry Rank of 80, which puts it in the top 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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