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1. Company Snapshot

1.a. Company Description

Héroux-Devtek Inc.engages in the design, development, manufacture, assembling, and repair and overhaul of aircraft landing gears, hydraulic and electromechanical flight control actuators, custom ball screws, and fracture-critical components.The company also assembles and installs aircraft components at customer assembly lines.


In addition, it offers electro-mechanical linear actuation systems; design, engineering, and product support services; surface treatment services; and electronic enclosures, heat exchangers, cabinets, and titanium components.The company serves commercial and defense sectors of the aerospace industries.It operates in Canada, the United States, the United Kingdom, Rest of Europe, Spain, and internationally.


The company was formerly known as Heroux Inc.and changed its name to Héroux-Devtek Inc.in 2000.


Héroux-Devtek Inc.was incorporated in 1942 and is headquartered in Longueuil, Canada.

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1.b. Last Insights on HRX

Héroux-Devtek Inc.'s recent performance was driven by the acquisition completion by Platinum Equity, a leading global investment firm. This strategic move is expected to enhance the company's growth prospects and competitiveness in the aerospace industry. Additionally, the strong fundamentals of the Canadian economy, including a solid economic backdrop and potential interest rate adjustments from the Bank of Canada, create a favorable environment for the company's growth.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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PLATINUM EQUITY COMPLETES ACQUISITION OF HÉROUX-DEVTEK

Feb -12

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3 Canadian Undiscovered Gems With Promising Potential

Jan -30

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Discovering Canada's Hidden Stock Gems in January 2025

Jan -01

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Undiscovered Gems in Canada to Watch This December 2024

Dec -03

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Héroux-Devtek's Gilles Labbé has taken some hard knocks on the road to aerospace greatness

Oct -29

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Héroux-Devtek Inc. (TSE:HRX) most popular amongst individual investors who own 41% of the shares, institutions hold 37%

Sep -03

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Héroux-Devtek Inc.'s (TSE:HRX) Stock Is Going Strong: Is the Market Following Fundamentals?

Aug -09

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M&A Watch: 3 Canadian Companies That Should Be on American Firms’ Buy Lists

Jul -25

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.63%)

6. Segments

Defence

Expected Growth: 7%

Héroux-Devtek Inc.'s 7% growth in Defence is driven by increasing demand for landing gear and actuation systems, driven by rising global defence spending, modernization of military fleets, and growing adoption of unmanned aerial vehicles (UAVs). Additionally, the company's strategic acquisitions and investments in R&D have enhanced its product offerings and competitiveness.

Civil

Expected Growth: 9%

Civil segment growth of 9% at Héroux-Devtek Inc. is driven by increasing demand for commercial aircraft, driven by rising air travel and cargo transportation. Additionally, the company's focus on innovation, cost reduction, and strategic partnerships contribute to its growth. Furthermore, the growing need for aircraft maintenance, repair, and overhaul (MRO) services also supports the segment's expansion.

7. Detailed Products

Landing Gear

Héroux-Devtek designs and manufactures landing gear systems for commercial, business, and military aircraft, including main and nose landing gear, as well as landing gear components.

Actuation Systems

Héroux-Devtek develops and manufactures actuation systems, including hydraulic, electric, and pneumatic systems, for aircraft and aerostructure applications.

Aerostructures

Héroux-Devtek designs and manufactures complex aerostructures, including fuselage sections, wings, and control surfaces, for commercial and military aircraft.

Engineering Services

Héroux-Devtek offers engineering services, including design, analysis, and testing, for the aerospace and defense industries.

Aftermarket Services

Héroux-Devtek provides aftermarket services, including maintenance, repair, and overhaul (MRO), for aircraft and aerostructure components.

8. Héroux-Devtek Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Héroux-Devtek Inc. is medium due to the presence of alternative products and services in the aerospace industry.

Bargaining Power Of Customers

The bargaining power of customers for Héroux-Devtek Inc. is low due to the company's strong relationships with its customers and the lack of buyer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Héroux-Devtek Inc. is medium due to the presence of multiple suppliers in the industry, but the company's dependence on a few key suppliers.

Threat Of New Entrants

The threat of new entrants for Héroux-Devtek Inc. is low due to the high barriers to entry in the aerospace industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for Héroux-Devtek Inc. is high due to the presence of several established competitors in the aerospace industry, leading to a highly competitive market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 32.09%
Debt Cost 7.36%
Equity Weight 67.91%
Equity Cost 12.03%
WACC 10.53%
Leverage 47.26%

11. Quality Control: Héroux-Devtek Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Magellan Aerospace

A-Score: 5.8/10

Value: 5.8

Growth: 4.8

Quality: 5.4

Yield: 3.0

Momentum: 9.5

Volatility: 6.3

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Sturm Ruger

A-Score: 5.6/10

Value: 2.9

Growth: 2.8

Quality: 5.0

Yield: 8.0

Momentum: 7.5

Volatility: 7.7

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Park Aerospace

A-Score: 5.4/10

Value: 0.8

Growth: 2.4

Quality: 6.4

Yield: 7.0

Momentum: 9.5

Volatility: 6.0

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Cadre Holdings

A-Score: 4.1/10

Value: 1.5

Growth: 6.4

Quality: 5.6

Yield: 2.0

Momentum: 4.0

Volatility: 5.3

1-Year Total Return ->

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Héroux-Devtek

A-Score: 4.1/10

Value: 3.1

Growth: 4.8

Quality: 5.3

Yield: 0.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

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VirTra

A-Score: 3.3/10

Value: 3.6

Growth: 5.9

Quality: 5.8

Yield: 0.0

Momentum: 2.5

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

32.48$

Current Price

32.48$

Potential

-0.00%

Expected Cash-Flows