What changed
$HEI — AVOID 📊 | 6 MONTHS THESIS
🎯 FQ2 FY2026 (ends Apr) | reported May 27 | Rev $1.4B | EPS $1.66 vs $1.33 🟢 | Margin 25.5%
💡 The market is extrapolating a single quarter's 24.8% EPS beat into perpetuity, ignoring the historically elevated multiple. Consensus likely expects continued acceleration, while my view is that growth will moderate, exposing the overvaluation. The gap is between euphoric expectations and realistic industrial growth rates.
📉 Reward/risk: 0.6:1
🏢 Business Quality: 7/10
📊 Valuation: rich: Trailing P/E 131.6x versus sector 21x; even using a generous 30x P/E on annualized EPS of $6.64 yields a target of $199, still 77% downside.
🔮 Catalyst: FQ3 FY2026 earnings (estimated Aug 2026)
💰 Entry: $345.21, stop $699.09, target $139.44
⚖️ Avoid: HEI's 131x trailing P/E unsustainably prices in perfection; sector median 21x implies 84% downside, making long entry unfavorable.