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Hawaiian Electric to Gain on Base Rate Hike, Regulations Hurt
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On Dec 19, we issued an updated research report on Honolulu-based Hawaiian Electric Industries Inc. (HE - Free Report) . The company, along with its subsidiaries, is engaged in electric utility, banking and other businesses primarily in the state of Hawaii. It is the largest provider of electricity in the state of Hawaii, supplying power to more than 95% of the state’s population.
Gradual recovery in the Hawaiian economy backed by a decrease in unemployment rates, growth in the state’s gross domestic product, higher median sales price for single-family residential homes and increasing private building permits are expected to boost the company’s performance.
Also, the company recently filed for an increase in base rates in the island of O'ahu. This rate hike will result in a 6.9% increase in Hawaiian Electric’s revenues, translating into annual contributions of $106 million. However, even if the full amount of the filing is approved, the new bills would be lower than the 2015 levels owing to relatively low fuel prices and Hawaiian Electric’s cost-reduction strategies.
Also included in the filing is a proposal of new benchmarks set by the company to quantify its performance and link certain revenues to key objectives like customer service and reliability.
Moreover, Hawaiian’s stock gained about 19.1% in the last one year, below the Zacks categorized Utility-Electric Power industry’s 7.6% over the same time frame. The primary reason for this outperformance is the company’s focus on growing its renewable assets as well as systematic investments in transmission and distribution projects, which will drive growth over the long haul. This is line with the performance delivered by other companies in the same space like Ameren Corporation (AEE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and DTE Energy Company (DTE - Free Report) that have beat the industry mark.
On the flip side, stringent government regulations for curbing emissions raise concern for the company. Moreover, Hawaiian Electric’s facilities are subject to various operational risks resulting from plant outages.
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Hawaiian Electric to Gain on Base Rate Hike, Regulations Hurt
On Dec 19, we issued an updated research report on Honolulu-based Hawaiian Electric Industries Inc. (HE - Free Report) . The company, along with its subsidiaries, is engaged in electric utility, banking and other businesses primarily in the state of Hawaii. It is the largest provider of electricity in the state of Hawaii, supplying power to more than 95% of the state’s population.
Gradual recovery in the Hawaiian economy backed by a decrease in unemployment rates, growth in the state’s gross domestic product, higher median sales price for single-family residential homes and increasing private building permits are expected to boost the company’s performance.
Also, the company recently filed for an increase in base rates in the island of O'ahu. This rate hike will result in a 6.9% increase in Hawaiian Electric’s revenues, translating into annual contributions of $106 million. However, even if the full amount of the filing is approved, the new bills would be lower than the 2015 levels owing to relatively low fuel prices and Hawaiian Electric’s cost-reduction strategies.
Also included in the filing is a proposal of new benchmarks set by the company to quantify its performance and link certain revenues to key objectives like customer service and reliability.
Moreover, Hawaiian’s stock gained about 19.1% in the last one year, below the Zacks categorized Utility-Electric Power industry’s 7.6% over the same time frame. The primary reason for this outperformance is the company’s focus on growing its renewable assets as well as systematic investments in transmission and distribution projects, which will drive growth over the long haul. This is line with the performance delivered by other companies in the same space like Ameren Corporation (AEE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and DTE Energy Company (DTE - Free Report) that have beat the industry mark.
On the flip side, stringent government regulations for curbing emissions raise concern for the company. Moreover, Hawaiian Electric’s facilities are subject to various operational risks resulting from plant outages.
Zacks Rank & Key Picks
Hawaiian Electric currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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