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HEI (HE) Up 7.8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Hawaiian Electric (HE). Shares have added about 7.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is HEI due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Hawaiian Electric Misses on Q4 Earnings, Hikes Dividend

Hawaiian Electric reported earnings per share (EPS) of 45 cents in the fourth quarter of 2018, which missed the Zacks Consensus Estimate of 47 cents by 4.3%. However, on a year-over-year basis, the bottom line improved a solid 50% from the prior-year quarter’s tally of 30 cents.

The year-over-year earnings upside was driven by net revenue growth from rate relief and recovery through the RAM and MPIR mechanisms, positive impact from the pole ownership agreement with Hawaiian Telcom and lower fourth-quarter 2017 earnings due to the one-time impact of federal tax reform.

For 2018, the company’s EPS came in at $1.85 cents, which fell short of the Zacks Consensus Estimate of $1.87 by 1.1%. However, the metric improved 21.7% from the year-ago tally of $1.52.

Total Revenues

Hawaiian Electric’s total revenues of $761.7 million in the reported quarter surpassed the Zacks Consensus Estimate of $659 million by 15.6% and improved 15.6% year over year. Increased contributions from both the Electric Utility and Bank segments led to the upside.

For 2018, the company generated revenues worth $2.86 billion, which outpaced the Zacks Consensus Estimate of $2.62 billion by 9.2%. The top line also improved 11.9% from the year-ago tally of $2.56 billion.

Operating Statistics

Total expenses increased 18.5% year over year to $677 million during the fourth quarter.

Consequently, total operating income dropped 3% year over year to $84.6 million due to lower contributions from the Electric Utility segment.

Interest expenses amounted to $22.6 million, up from $19.7 million in the prior-year quarter.

Segment Details

Electric Utility: Revenues at this segment amounted to $680.6 million, up 16.7% year over year. Also, net income increased to $35.8 million from $25.9 million a year ago.

Banking: At this segment revenues totaled $81.3 million, up 8.1%. Meanwhile, net income came in at $21.8 million, up 29.1%.

Dividend Update

Based on its solid performance in 2018 and projected growth for the future, Hawaiian Electric’s management raised its dividend payment by a penny to 32 cents as announced on Feb 14, 2019. The hiked dividend now results into annual dividend payout of $1.28 for the company’s shareholders. The dividend will be paid on Mar 13, 2019, to Hawaiian Electric’s shareholders of record at the close of business on Feb 26, 2019.

Guidance

Hawaiian Electric issued its earnings guidance for 2019. The company expects to generate earnings in the range of $1.85–$2.05 per share. Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $1.99, higher than the mid-point of the company’s guided  range for the current year. 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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