Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin25.5%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin17.0%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
D
Years to Pay Off Debt11.1 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt-$851M
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital$1.7B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Margin of Safety0.0%
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book3.90x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
A
Free Cash Flow$274M
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income7.7%
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings$308M
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About HEICO Corporation
HEICO Corporation provides aerospace, defense, and electronic related products and services in the United States and internationally. Its Flight Support Group segment offers jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components and assemblies. This segment also distributes hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components for the commercial, regional, and general aviation markets; and offers repair and overhaul services for jet engine and aircraft component parts, avionics, instruments, composites, and commercial aircraft surfaces, as well as for avionics and navigation systems, subcomponents, and other military aircraft instruments. The company's Electronic Technologies Group segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and radio frequency (RF) interference shielding and suppression filters; power electronics; power conversion and interface products; interconnection devices; and underwater locator and emergency locator transmission beacons. This segment also offers traveling wave tube amplifiers and microwave power modules; memory products and specialty semiconductors; environment connectivity products and molded cable assemblies; RF and microwave products; communications and electronic intercept receivers and tuners; self-sealing auxiliary fuel systems; active antenna systems and airborne antennas; nuclear radiation detectors; power amplifiers; ceramic-to-metal feedthroughs and connectors; technical surveillance countermeasures equipment; RF receivers and sources; radiation assurance, embedded computing, and silicone solutions; test sockets and adapters; and electronic components and rotary joint assemblies. The company was incorporated in 1957 and is headquartered in Hollywood, Florida.
HEICO Corporation provides aerospace, defense, and electronic related products and services in the United States and internationally. Its Flight Support Group segment offers jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components and assemblies. This segment also distributes hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components for the commercial, regional, and general aviation markets; and offers repair and overhaul services for jet engine and aircraft component parts, avionics, instruments, composites, and commercial aircraft surfaces, as well as for avionics and navigation systems, subcomponents, and other military aircraft instruments. The company's Electronic Technologies Group segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and radio frequency (RF) interference shielding and suppression filters; power electronics; power conversion and interface products; interconnection devices; and underwater locator and emergency locator transmission beacons. This segment also offers traveling wave tube amplifiers and microwave power modules; memory products and specialty semiconductors; environment connectivity products and molded cable assemblies; RF and microwave products; communications and electronic intercept receivers and tuners; self-sealing auxiliary fuel systems; active antenna systems and airborne antennas; nuclear radiation detectors; power amplifiers; ceramic-to-metal feedthroughs and connectors; technical surveillance countermeasures equipment; RF receivers and sources; radiation assurance, embedded computing, and silicone solutions; test sockets and adapters; and electronic components and rotary joint assemblies. The company was incorporated in 1957 and is headquartered in Hollywood, Florida.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Margin of Safety
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Mr. Market is currently offering HEICO Corporation at $337.10.
The business passes only 2 of 6 of Graham's defensive criteria — well below his required standard.
At $337.10, the stock trades at a 493% premium to its Graham Number of $56.84. Graham would consider this price speculative.
There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.
Negative NCAV — liabilities exceed current assets. Common in capital-return businesses (buybacks, debt-funded dividends) and capital-intensive industries. Not automatically a warning sign..
Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.
Showing Key Metrics
Income Highlights
Metric
Q2 2026
Q4 2025
Gross Profit %
41.4%▲
40.2%
Operating Margin %
25.5%▲
23.1%
Net Income %
17.0%▲
15.6%
Diluted EPS
1.66▲
1.33
Balance Sheet Highlights
Metric
Q2 2026
Q4 2025
Q4 2024
Total Assets
$9.6B
$8.5B
N/A
Total Debt
$2.6B▲
$2.2B•
N/A
Working Capital
$1.7B▲
$1.5B•
N/A
Years to Pay Debt
11.07
11.65
N/A
Cash Flow Highlights
Metric
Q2 2026
Q4 2025
Q4 2024
Free Cash Flow
$274M▲
$268M•
N/A
Owner Earnings
$308M
$266M
N/A
CapEx % of Net Income
7.7%
14.3%
N/A
Income Statement
2026
2025
Tax Rate For Calcs
0
0
Normalized EBITDA
408,325
331,445
Net Income From Continuing Operation Net Minority Interest
233,801
188,296
Reconciled Depreciation
56,634
51,207
Reconciled Cost Of Revenue
806,188
723,570
EBITDA
408,325
331,445
EBIT
351,691
280,238
Net Interest Income
-34,161
-32,853
Interest Expense
34,161
32,853
Normalized Income
233,801
188,296
Net Income From Continuing And Discontinued Operation
233,801
188,296
Total Expenses
1,025,276
930,389
Total Operating Income As Reported
350,437
279,022
Diluted Average Shares
141,068
141,050
Basic Average Shares
139,561
139,215
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
233,801
188,296
Net Income Common Stockholders
233,801
188,296
Net Income
233,801
188,296
Minority Interests
-16,529
-14,489
Net Income Including Noncontrolling Interests
250,330
202,785
Net Income Continuous Operations
250,330
202,785
Tax Provision
67,200
44,600
Pretax Income
317,530
247,385
Other Income Expense
1,254
1,216
Other Non Operating Income Expenses
1,254
1,216
Net Non Operating Interest Income Expense
-34,161
-32,853
Interest Expense Non Operating
34,161
32,853
Operating Income
350,437
279,022
Operating Expense
219,088
206,819
Selling General And Administration
219,088
206,819
Gross Profit
569,525
485,841
Cost Of Revenue
806,188
723,570
Total Revenue
1,375,713
1,209,411
Operating Revenue
1,375,713
1,209,411
Balance Sheet
2026
2025
2024
Ordinary Shares Number
139,659
139,341
Share Issued
139,659
139,341
Net Debt
2,376,955
1,950,164
Total Debt
2,587,290
2,193,681
Tangible Book Value
-1,140,485
-827,745
Invested Capital
7,359,348
6,473,264
Working Capital
1,732,894
1,524,362
Net Tangible Assets
-1,140,485
-827,745
Capital Lease Obligations
25,736
23,422
Common Stock Equity
4,772,058
4,305,319
Total Capitalization
7,355,946
6,469,906
Total Equity Gross Minority Interest
5,391,571
4,379,175
Minority Interest
619,513
73,856
Stockholders Equity
4,772,058
4,305,319
Gains Losses Not Affecting Retained Earnings
7,472
5,581
Other Equity Adjustments
7,472
5,581
Retained Earnings
4,033,326
3,647,678
Additional Paid In Capital
729,863
650,667
Capital Stock
1,397
1,393
Common Stock
1,397
1,393
Total Liabilities Net Minority Interest
4,200,642
4,121,259
Total Non Current Liabilities Net Minority Interest
3,297,060
3,289,255
Other Non Current Liabilities
548,588
550,124
Preferred Securities Outside Stock Equity
467,358
366,156
Non Current Deferred Liabilities
164,584
107,186
Non Current Deferred Taxes Liabilities
164,584
107,186
Long Term Debt And Capital Lease Obligation
2,583,888
2,164,587
Long Term Debt
2,583,888
2,164,587
Current Liabilities
903,582
832,004
Other Current Liabilities
80,908
76,430
Current Deferred Liabilities
79,529
83,903
Current Deferred Revenue
79,529
83,903
Current Debt And Capital Lease Obligation
3,402
29,094
Current Capital Lease Obligation
25,736
23,422
Current Debt
3,402
3,358
Other Current Borrowings
3,358
4,107
Pensionand Other Post Retirement Benefit Plans Current
103,520
5,770
Payables And Accrued Expenses
900,180
538,953
Current Accrued Expenses
594,007
47,385
Interest Payable
16,690
17,462
Payables
306,173
491,568
Total Tax Payable
12,429
260,528
Income Tax Payable
12,429
19,982
Accounts Payable
293,744
231,040
Total Assets
9,592,213
8,500,434
Total Non Current Assets
6,955,737
6,144,068
Other Non Current Assets
580,363
579,294
Goodwill And Other Intangible Assets
5,912,543
5,133,064
Other Intangible Assets
1,715,157
1,471,440
Goodwill
4,197,386
3,661,624
Net PPE
462,831
431,710
Accumulated Depreciation
-435,912
-407,747
Gross PPE
898,743
839,457
Construction In Progress
29,609
21,812
Machinery Furniture Equipment
513,844
476,735
Buildings And Improvements
258,355
255,776
Land And Improvements
96,935
85,134
Current Assets
2,636,476
2,356,366
Other Current Assets
149,069
86,377
Inventory
1,410,527
1,295,336
Finished Goods
747,912
715,286
Work In Process
142,901
119,611
Raw Materials
519,714
460,439
Receivables
866,545
756,872
Other Receivables
131,590
119,257
Accounts Receivable
734,955
637,615
Allowance For Doubtful Accounts Receivable
-11,474
-10,249
Gross Accounts Receivable
746,429
647,864
Cash Cash Equivalents And Short Term Investments
210,335
217,781
Cash And Cash Equivalents
210,335
217,781
Cash Flow
2026
2025
2024
Free Cash Flow
273,923
268,478
Repayment Of Debt
-307,700
-275,000
Issuance Of Debt
387,700
0
Capital Expenditure
-18,050
-26,848
End Cash Position
210,335
217,781
Beginning Cash Position
260,971
261,888
Effect Of Exchange Rate Changes
-930
490
Changes In Cash
-49,706
-44,597
Financing Cash Flow
62,310
-305,926
Cash Flow From Continuing Financing Activities
62,310
-305,926
Net Other Financing Charges
-18,355
-12,051
Proceeds From Stock Option Exercised
665
-18,875
Cash Dividends Paid
0
0
Common Stock Dividend Paid
0
Net Issuance Payments Of Debt
80,000
-275,000
Net Long Term Debt Issuance
80,000
-275,000
Long Term Debt Payments
-307,700
-275,000
Long Term Debt Issuance
387,700
0
Investing Cash Flow
-403,989
-33,997
Cash Flow From Continuing Investing Activities
-403,989
-33,997
Net Other Investing Changes
-3,267
4,020
Net Investment Purchase And Sale
-2,800
-11,269
Net Business Purchase And Sale
-379,872
100
Purchase Of Business
-379,872
100
Capital Expenditure Reported
-18,050
-26,848
Operating Cash Flow
291,973
295,326
Cash Flow From Continuing Operating Activities
291,973
295,326
Change In Working Capital
-49,687
30,253
Change In Other Working Capital
3,587
491
Change In Payables And Accrued Expense
54,645
39,624
Change In Accrued Expense
31,314
32,702
Change In Payable
23,331
6,922
Change In Account Payable
45,884
-1,326
Change In Tax Payable
-22,553
8,248
Change In Income Tax Payable
-22,553
8,248
Change In Prepaid Assets
-14,633
549
Change In Inventory
-23,362
15,307
Change In Receivables
-69,924
-25,718
Changes In Account Receivables
-59,871
-39,513
Other Non Cash Items
14,581
8,567
Stock Based Compensation
11,221
16,035
Asset Impairment Charge
0
1,500
Deferred Tax
4,321
-19,776
Deferred Income Tax
4,321
-19,776
Depreciation Amortization Depletion
56,634
51,207
Depreciation And Amortization
56,634
51,207
Amortization Cash Flow
41,781
37,157
Amortization Of Intangibles
41,781
37,157
Depreciation
14,853
14,050
Operating Gains Losses
4,573
6,255
Pension And Employee Benefit Expense
4,573
6,255
Net Income From Continuing Operations
250,330
202,785
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $1.1B▲ $1.4B+25.3%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 39.9%▲ 41.4%+1.5pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 31.9%▲ 25.5%-6.4pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 14.3%▲ 17.0%+2.7pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$1.4B/qtr (≈$5.5B ann.)
vs > $1.5B annualised revenue
✅ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
2.92x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$274M
vs Positive
Operating Cash Flow
$292M
Latest quarter · Buffett's cash reality check
ROIC
3.2%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
3.4x
Net Assets: $5.4B
⚠️Revenue grew vs prior year but operating margin contracted. Possible explanations: deliberate investment in growth (hiring, marketing, R&D), input cost inflation, or pricing pressure from competition. Buffett distinguishes between spending that builds moat vs. spending that doesn't.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
22.85%
High — management has strong skin in the game
Return on Equity (ROE)
4.9%
Weak — poor returns on equity
Return on Assets (ROA)
2.4%
Fair — average asset utilization
Debt Trend YoY
+3.2% YoY
Debt is roughly stable
Leadership Team
Eric Mendelson
Co-CEO, Co-President & Co-Chairman
Age 60
Pay: $5,507,761
2.356% of net income
Victor Mendelson
Co-CEO, Co-President & Co-Chairman
Age 58
Pay: $5,366,967
2.296% of net income
Carlos Macau Jr.
Executive VP, CFO & Treasurer
Age 58
Pay: $3,707,455
1.586% of net income
Top Institutional Holders
Institution
% Owned
Shares
Blackrock Inc.
7.46%
4,113,643
Capital International Investors
4.82%
2,661,900
Capital World Investors
4.29%
2,364,929
Vanguard Portfolio Management LLC
4.05%
2,235,217
State Street Corporation
3.15%
1,738,536
FMR, LLC
2.76%
1,524,632
Vanguard Capital Management LLC
2.42%
1,333,103
Morgan Stanley
1.86%
1,024,012
Risk Analysis
Beta (Market Risk)
1.03
Moderate volatility — moves slightly more than market
Short Interest
1.6% of float
Low short interest — market is not heavily bearish
Debt-to-Equity
0.48x
Conservative balance sheet — low financial risk
Current Ratio
2.92x
Strong liquidity — Graham approved
52-Week Price Range
Low: $256.11Current: $337.10High: $361.69
Currently at 77% of 52-week range
HEICO Corporation (HEI) fundamental analysis — Overall grade C based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: $56.84. Margin of safety: 0%. Gross profit margin: 41.4%. Operating margin: 25.5%. Net margin: 17.0%. Market cap: $47.1B. Sector: Industrials. Industry: Aerospace & Defense. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
Disclaimer: 360investing is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice. All data is sourced from public third-party providers
and may be delayed, inaccurate, or incomplete. Past performance is not indicative of future results. Analysis, scores, and valuations are algorithmic and do not represent professional investment recommendations. Always conduct your own due
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