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Why Is HEI (HE) Up 4.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Hawaiian Electric (HE). Shares have added about 4.1% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Hawaiian Electric Q1 Earnings Beat, Revenues Up Y/Y

Hawaiian Electric reported earnings per share (EPS) of 42 cents in the first quarter of 2019, which surpassed the Zacks Consensus Estimate of 39 cents by 7.7%. The bottom line also improved 13.5% from 37 cents registered in the prior-year quarter. Solid revenues and operating income in the quarter under review led to the uptick.

Total Revenues

Hawaiian Electric’s total revenues of $661.6 million in the first quarter outpaced the Zacks Consensus Estimate of $579 million by 14.3% and also rose 2.4% year over year. The improvement can be attributed to increased contributions from both the Electric Utility and Bank segments.

Operating Statistics

Total expenses increased 1.7% year over year to $538.7 million during the first quarter.

However, total operating income rose 8.4% year over year to $77.9 million driven by higher contributions from both the Electric Utility and Bank segments.

Net interest expenses amounted to $23.1 million, up from $21.5 million in the prior-year quarter.

Segment Details

Electric Utility: Revenues at this segment totaled $578.5 million, up 1.4% year over year. Also, net income increased to $32.6 million from $28 million a year ago.

Banking: At this segment revenues summed $83.1 million, up 10.1% year over year. Meanwhile, net income came in at $20.8 million, up 9.9%.

Quarterly Highlights

In the first quarter, the Public Utilities Commission approved the company’s six renewable power purchase agreements. This, in turn, is expected to bring a significant amount of solar-plus-battery-storage projects for Hawaiian Electric in Oahu, Maui and Hawaii Island.

Guidance

Hawaiian Electric reaffirmed its earnings guidance for 2019. The company continues to expect earnings in the range of $1.85-$2.05 per share. The Zacks Consensus Estimate for 2019 earnings is pegged at $1.94, just below the midpoint of the company’s guided range.
 

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.

VGM Scores

Currently, HEI has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

HEI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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