Despite posting better-than-anticipated third-quarter numbers, shares of aerospace and defense product provider HEICO (NYSE:HEI) are plummeting today due to pressure on its margins.
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During the quarter, revenue surged by 27% year-over-year to $722.9 million, surpassing estimates by $15.9 million. Additionally, EPS of $0.74 inched past estimates by $0.02.
Impressively, HEICO has now seen 12 consecutive quarters of sequential improvement in net sales at the Flight Support Group (FSG). While EBITDA increased by 18% to $179.8 million, the company’s consolidated operating margin dropped to 20.7% from 22.6% in the year-ago quarter.
Driven by product demand, the company expects net sales to rise in both its FSG and Electronic Technologies Group (ETG) verticals during the rest of the year. However, it also expects inflationary challenges and supply chain woes to result in higher material and labor costs.
Overall, the Street has a consensus price target of $199.43 on HEICO, along with a Moderate Buy consensus rating.
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