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Hawaiian Electric (HE) Misses on Q4 Earnings, Hikes Dividend

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Hawaiian Electric Industries Inc. (HE - Free Report) 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 in an 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. 

Zacks Rank

Hawaiian Electric currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the same space is Edison International (EIX - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edison International exceeded the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 7.17%. The company has a solid long-term earnings growth rate of 5.9%.

Recent Utility Releases

American Electric Power Co., Inc. (AEP - Free Report) reported fourth-quarter 2018 operating earnings per share (EPS) of 72 cents in line with the Zacks Consensus Estimate.

NextEra Energy, Inc. (NEE - Free Report) reported fourth-quarter 2018 adjusted earnings of $1.49 per share, which fell short of the Zacks Consensus Estimate of $1.51 by 1.3%.

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