HEICO Corporation (HEI) Discounted Future Market Cap

HEICO Corporation

HEI (NYSE)

(%)

Valuation
HEICO Corporation Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	416 USD
Estimated net income	1.24 Bil. USD
Estimated market capitalization	88.46 Bil. USD
Market capitalization discounted to present	57.91 Bil. USD
Shares Outstanding	139.2 Mil.
Earnings Per Share (EPS)	4.96 USD
Market Price	352.6 USD
Price to Earnings (PE) Ratio	71.09

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-10-31", "y": 1376258000}, {"l": "2017", "x": "2017-10-31", "y": 1524813000}, {"l": "2018", "x": "2018-10-31", "y": 1777721000}, {"l": "2019", "x": "2019-10-31", "y": 2055647000}, {"l": "2020", "x": "2020-10-31", "y": 1787009000}, {"l": "2021", "x": "2021-10-31", "y": 1865682000}, {"l": "2022", "x": "2022-10-31", "y": 2208322000}, {"l": "2023", "x": "2023-10-31", "y": 2968105000}, {"l": "2024", "x": "2024-10-31", "y": 3857669000}, {"l": "2025", "x": "2025-10-31", "y": 4485044000}, {"l": "2026", "x": "2026-10-31", "y": 5093215966, "oy": 5093215966, "e": true, "d": 2026, "g": 13.56, "og": 13.56}, {"l": "2027", "x": "2027-10-31", "y": 5783856051, "oy": 5783856051, "e": true, "d": 2027, "g": 13.56, "og": 13.56}, {"l": "2028", "x": "2028-10-31", "y": 6568146932, "oy": 6568146932, "e": true, "d": 2028, "g": 13.56, "og": 13.56}, {"l": "2029", "x": "2029-10-31", "y": 7458787656, "oy": 7458787656, "e": true, "d": 2029, "g": 13.56, "og": 13.56}, {"l": "2030", "x": "2030-10-31", "y": 8470199262, "oy": 8470199262, "e": true, "d": 2030, "g": 13.56, "og": 13.56}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-10-31", "y": 156192000}, {"l": "2017", "x": "2017-10-31", "y": 185985000}, {"l": "2018", "x": "2018-10-31", "y": 259233000}, {"l": "2019", "x": "2019-10-31", "y": 327896000}, {"l": "2020", "x": "2020-10-31", "y": 313984000}, {"l": "2021", "x": "2021-10-31", "y": 304220000}, {"l": "2022", "x": "2022-10-31", "y": 351675000}, {"l": "2023", "x": "2023-10-31", "y": 403596000}, {"l": "2024", "x": "2024-10-31", "y": 514109000}, {"l": "2025", "x": "2025-10-31", "y": 690385000}, {"l": "2026", "x": "2026-10-31", "y": 748193425, "oy": 748193425, "e": true, "d": 2026, "g": 8.37, "og": 8.37}, {"l": "2027", "x": "2027-10-31", "y": 849648453, "oy": 849648453, "e": true, "d": 2027, "g": 13.56, "og": 13.56}, {"l": "2028", "x": "2028-10-31", "y": 964860784, "oy": 964860784, "e": true, "d": 2028, "g": 13.56, "og": 13.56}, {"l": "2029", "x": "2029-10-31", "y": 1095695906, "oy": 1095695906, "e": true, "d": 2029, "g": 13.56, "og": 13.56}, {"l": "2030", "x": "2030-10-31", "y": 1244272271, "oy": 1244272271, "e": true, "d": 2030, "g": 13.56, "og": 13.56}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-10-31": 42, "2027-10-31": 43, "2028-10-31": 44, "2029-10-31": 45, "2030-10-31": 46}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-10-31	2027-10-31	2028-10-31	2029-10-31	2030-10-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Oct 31	LTM Jan 19	2026 Oct 31	2027 Oct 31	2028 Oct 31	2029 Oct 31	2030 Oct 31
Revenue	4,485	4,485	5,093	5,784	6,568	7,459	8,470
Revenue Growth Rate	16.26%	0%	13.56%	13.56%	13.56%	13.56%	13.56%
Net Income	690.4	690.4	748.2	849.6	964.9	1,096	1,244

Monetary values in USD

amounts except #

2025
Oct 31

LTM
Jan 19

2026
Oct 31

2027
Oct 31

2028
Oct 31

2029
Oct 31

2030
Oct 31

Revenue

4,485

5,093

5,784

6,568

7,459

8,470

Revenue Growth Rate

16.26%

13.56%

Net Income

690.4

748.2

849.6

964.9

1,096

1,244

Historical Values

Monetary values in USD amounts except #	Average	LTM Jan 19	2025 Oct 31	2024 Oct 31	2023 Oct 31	2022 Oct 31	2021 Oct 31	2020 Oct 31	2019 Oct 31	2018 Oct 31	2017 Oct 31	2016 Oct 31
Revenue	2,581	4,485	4,485	3,858	2,968	2,208	1,866	1,787	2,056	1,778	1,525	1,376
Cost of Revenue	1,510	2,642	2,699	2,245	1,719	1,270	1,069	1,039	1,175	1,030	903.6	816
Gross Profit	1,071	1,843	1,786	1,613	1,249	938.8	796.3	747.7	880.5	748.2	621.2	560.2
Gross Margin	41.66%	41.09%	39.83%	41.81%	42.09%	42.51%	42.68%	41.84%	42.83%	42.09%	40.74%	40.71%
Operating Income	563.5	1,026	1,019	834.3	647.6	487.9	394.9	377.2	459.8	375	307.8	268.4
Operating Margin	21.51%	22.88%	22.72%	21.63%	21.82%	22.1%	21.17%	21.11%	22.37%	21.09%	20.18%	19.5%
Net Income	381.6	690.4	690.4	514.1	403.6	351.7	304.2	314	327.9	259.2	186	156.2
Net Margin	14.69%	15.39%	15.39%	13.33%	13.6%	15.92%	16.31%	17.57%	15.95%	14.58%	12.2%	11.35%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Jan 19	2025 Oct 31	2024 Oct 31	2023 Oct 31	2022 Oct 31	2021 Oct 31	2020 Oct 31	2019 Oct 31	2018 Oct 31	2017 Oct 31	2016 Oct 31
Revenue	2,581	4,485	4,485	3,858	2,968	2,208	1,866	1,787	2,056	1,778	1,525	1,376
Revenue Growth Rate	13.56%	0%	16.26%	29.97%	34.41%	18.37%	4.4%	-13.07%	15.63%	16.59%	10.79%	15.78%
Net Income	381.6	690.4	690.4	514.1	403.6	351.7	304.2	314	327.9	259.2	186	156.2
Net Margin	14.69%	15.39%	15.39%	13.33%	13.6%	15.92%	16.31%	17.57%	15.95%	14.58%	12.2%	11.35%
Net Income Growth Rate	16.98%	0%	34.29%	27.38%	14.76%	15.6%	-3.11%	-4.24%	26.49%	39.38%	19.07%	17.12%
Stockholders Equity	2,494	4,305	4,305	3,637	3,146	2,606	2,263	1,980	1,667	1,398	1,161	963.4
Equity Growth Rate	16.55%	0%	18.38%	15.6%	20.71%	15.16%	14.29%	18.82%	19.19%	20.43%	20.52%	18.96%
Return on Invested Capital (ROIC)	11.13%	11.49%	11.41%	10.17%	8.15%	10.98%	10.87%	11.98%	14.4%	13.01%	9.7%	10.32%
After-tax Operating Income	460.2	856.4	850.2	688.4	518.3	388.2	336.4	347.3	377.8	300.7	214.5	183.9
Income Tax Rate	19.38%	16.56%	16.56%	17.49%	19.97%	20.45%	14.8%	7.95%	17.84%	19.82%	30.31%	31.47%
Invested Capital	4,226	7,451	7,451	6,767	6,359	3,535	3,095	2,900	2,623	2,311	2,211	1,782