Aerospace and defense company HEICO (NSYE:HEI) announced better-than-expected revenue in Q2 CY2025, with sales up 15.7% year on year to $1.15 billion. Its GAAP profit of $1.26 per share was 10.3% above analysts’ consensus estimates.

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Laurans A. Mendelson, HEICO's Executive Chairman, along with Co-Chief Executive Officers Eric A. Mendelson and Victor H. Mendelson, commented on the Company's third quarter results stating, "We are proud to report record quarterly net income, operating income and net sales, mainly reflecting robust double-digit consolidated organic net sales growth. These results are highlighted by consistently strong organic net sales growth across the Flight Support Group's product lines and impressive double-digit organic net sales growth for the Electronic Technologies Group's other electronics and space products.

Company Overview

Founded in 1957, HEICO (NYSE: HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, HEICO’s 17.7% annualized revenue growth over the last five years was incredible. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. HEICO’s annualized revenue growth of 27.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, HEICO reported year-on-year revenue growth of 15.7%, and its $1.15 billion of revenue exceeded Wall Street’s estimates by 3%.

Looking ahead, sell-side analysts expect revenue to grow 8.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above the sector average and suggests the market sees some success for its newer products and services.

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Operating Margin

HEICO has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 21.7%.

Looking at the trend in its profitability, HEICO’s operating margin rose by 1.8 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, HEICO generated an operating margin profit margin of 23.1%, up 1.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

HEICO’s EPS grew at a remarkable 13.2% compounded annual growth rate over the last five years. Despite its operating margin improvement during that time, this performance was lower than its 17.7% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Diving into HEICO’s quality of earnings can give us a better understanding of its performance. A five-year view shows HEICO has diluted its shareholders, growing its share count by 2.7%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For HEICO, its two-year annual EPS growth of 26.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q2, HEICO reported EPS of $1.26, up from $0.97 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects HEICO’s full-year EPS of $4.57 to grow 12.8%.

Key Takeaways from HEICO’s Q2 Results

We enjoyed seeing HEICO beat analysts’ revenue expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 2.1% to $311.90 immediately after reporting.

HEICO put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.