Financial Analysis: Heico Corporation (HEI) & Spirit Aerosystems Holdings (NYSE:SPR)

Heico Corporation (NYSE: HEI) and Spirit Aerosystems Holdings (NYSE:SPR) are both mid-cap aerospace companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

22.3% of Heico Corporation shares are held by institutional investors. Comparatively, 98.5% of Spirit Aerosystems Holdings shares are held by institutional investors. 9.8% of Heico Corporation shares are held by company insiders. Comparatively, 0.3% of Spirit Aerosystems Holdings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Heico Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.2%. Spirit Aerosystems Holdings pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. Heico Corporation pays out 7.9% of its earnings in the form of a dividend. Spirit Aerosystems Holdings pays out 14.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Spirit Aerosystems Holdings has raised its dividend for 7 consecutive years. Spirit Aerosystems Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Heico Corporation has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, Spirit Aerosystems Holdings has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500.

Profitability

This table compares Heico Corporation and Spirit Aerosystems Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Heico Corporation 12.08% 15.89% 8.24%
Spirit Aerosystems Holdings 4.97% 30.82% 10.70%

Analyst Recommendations

This is a summary of recent recommendations for Heico Corporation and Spirit Aerosystems Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Heico Corporation 0 4 4 0 2.50
Spirit Aerosystems Holdings 2 7 8 0 2.35

Heico Corporation presently has a consensus target price of $85.57, suggesting a potential downside of 0.43%. Spirit Aerosystems Holdings has a consensus target price of $69.36, suggesting a potential upside of 0.65%. Given Spirit Aerosystems Holdings’ higher probable upside, analysts plainly believe Spirit Aerosystems Holdings is more favorable than Heico Corporation.

Earnings & Valuation

This table compares Heico Corporation and Spirit Aerosystems Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Heico Corporation $1.43 billion 2.03 $352.83 million $2.02 42.59
Spirit Aerosystems Holdings $6.80 billion 1.20 $739.20 million $2.74 25.15

Spirit Aerosystems Holdings has higher revenue and earnings than Heico Corporation. Spirit Aerosystems Holdings is trading at a lower price-to-earnings ratio than Heico Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Spirit Aerosystems Holdings beats Heico Corporation on 11 of the 17 factors compared between the two stocks.

About Heico Corporation

HEICO Corporation manufactures Federal Aviation Administration (FAA)-approved jet engine and aircraft component replacement parts, other than the original equipment manufacturers (OEMs) and their subcontractors. The Company also manufactures various types of electronic equipment for the aviation, medical, telecommunications and electronics industries. It operates through two segments: Flight Support Group (FSG) and Electronic Technologies Group (ETG). The FSG segment consists of HEICO Aerospace Holdings Corp. and HEICO Flight Support Corp. and their collective subsidiaries. The FSG segment designs and manufactures jet engine and aircraft component replacement parts. The ETG segment consists of HEICO Electronic Technologies Corp. and its subsidiaries. The ETG segment designs and produces mission-critical subcomponents for various markets, which are utilized in larger systems, including targeting, tracking, identification, testing, communications, telecom and computer systems.

About Spirit Aerosystems Holdings

Spirit AeroSystems Holdings, Inc. is a non-original equipment manufacturer (OEM), aircraft parts designer and manufacturer of commercial aero-structures. The Company is also a supplier of aero-structures. The Company operates through three segments: Fuselage Systems, Propulsion Systems and Wing Systems. The Fuselage Systems segment includes the development, production and marketing of forward, mid and rear fuselage sections and systems. The Propulsion Systems segment includes the development, production and marketing of struts/pylons, nacelles (including thrust reversers) and related engine structural components. The Wing Systems segment includes the development, production and marketing of wings and wing components (including flight control surfaces), and other miscellaneous structural parts. The Company’s maintenance, repair and overhaul (MRO) services include repair stations that provide complete on-site repair and overhaul.

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