$HEI — AVOID 📊 | 6 MONTHS THESIS

$HEI — AVOID 📊 | 6 MONTHS THESIS 🧭 Conviction: MED 🎯 FQ2 FY2026 (ends Apr) | reported May 27 | Rev $1.4B | EPS $1.66 vs $1.33 🟢 | Margin 25.5% 💡 Consensus sees the earnings beat as a reason to bid up the stock, extrapolating elevated growth. Our variant view: the beat was partially one-off and the current multiple leaves no room for error—if growth normalizes, the P/E will contract sharply toward the sector median. 🏢 Business Quality: 8/10 📊 Valuation: rich — trailing P/E 52.0x vs industry median 21.0x and HEI's own 5-year average of ~35x; even on normalized EPS of $6.64, fair value (25–30x) lies... 🔮 Catalyst: Next quarterly earnings guidance or sector-wide margin normalization ⚖️ Avoid: the stock is priced for perfection at 52x trailing earnings, and even in a best-case scenario, upside is limited while downside exceeds 50% on any growth hiccup.

🧭 Conviction: MED