Q2/1H 2026 - HEICO - Full Analysis
Truly spectacular with strongly accelerating organic growth - a Diploma PLC deja-vu
Two days ago, after the closing bell, HEICO reported its Q2 and 1H 2026 results, showcasing an unexpectedly strong acceleration in organic growth with equally impressive margin expansion. The M&A pipeline is well-filled, and HEICO’s value-add proposition is paying big dividends.
Last March, we covered HEICO in our most extensive report to-date, focusing solely on what determines long-term shareholder returns and presenting the valuation model in easy-to-grasp drivers.
For us, solid and likely accelerating organic growth was one of the key reasons for buying into HEICO at the end of March 2026. It’s also fundamental to justifying the premium valuation, in our view.
Let’s review the quarter and update the valuation model, as well as the expected IRR from today’s levels. HEICO shares were 12% on Q2 earnings, and are up 30% (!) in a month. Talk about volatility.
Commenting on the results, HEICO’s Co-CEO, Eric Mendelson:
Before reviewing the numbers, I would first like to recognize and thank HEICO’s outstanding team members around the world for delivering another exceptional quarter. What HEICO continues to accomplish is remarkable, and on behalf of our leadership, the board of directors, and shareholders, we sincerely thank all of our team members for their continued commitment to our company, our customers, and to one another.
During the call, the management team talked about how the idea of making money easily in aerospace after the COVID-19 pandemic will lead to financial disasters. Conversely, HEICO’s model is all about rational and patient capital allocation - this approach will be in fashion when investors need it desperately.
Numbers At a High Level
While the conference call was filled with questions around the outlook on defense and the outstanding growth, management emphasized HEICO’s not a one-trick pony. All segments are firing on all cylinders.
In a nutshell, growth in HEICO’s sales was broad-based in both Flight Support Group (FSG) and Electronic Technologies Group (ETG). The word record pops up in multiple items, with particularly favorable momentum in defense and space:
In defense, our country and its allies have recognized the need to invest more in defense and to replace depleted stocks. We are now experiencing this in our defense sales, in our defense orders, and in our defense backlog. We expect this to continue and to have a multi-year tail for which we are very well-prepared. In space, the industry is rocketing ahead, pun intended, and so are we. - Victor Mendelson
You’ll recall that in Q1, there was some considerable margin pressure in the ETG business, also due to temporary slowdown in space sector shipments. Management expected normalization in the second half of the year but it turned out Q2 was already rock-solid, something they’re not overreacting to either. The best way to gauge underlying momentum is to smooth quarterly volatility out, and assess rolling performance instead.