We have maintained our long-term Neutral recommendation on
Hawaiian Electric Industries Inc.
) on Sep 13, 2013.
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Why Kept Neutral?
Honolulu-based Hawaiian Electric Industries Inc., incorporated in
1981, is a holding company with subsidiaries engaged in the
electric utility, banking and other businesses operating
primarily in the state of Hawaii.
The company came up with a positive earnings surprise with its
second quarter 2013 earnings beating the Zacks Consensus Estimate
by 7.9%. The results reflect higher bank earnings compared to the
same quarter last year. Yet, the positives were partly offset by
lower utility earnings due to a customer refund recorded in the
Apart from being the largest provider of electricity in the state
of Hawaii, the company also provides banking services to
individual and commercial customers. Its banking subsidiary is
one of the largest banks in Hawaii. During the quarter,
American Savings Bank delivered strong loan growth that helped in
offsetting the impact of lower utility earnings. The bank was one
of the top ranked lenders in the state for the quarter.
Year-to-date loan growth was 9.1%, driven by higher yielding
loans, including residential mortgages, coming in well above the
average peer growth.
However, lower electricity volume sales, a tourism-dependant
Hawaiian economy, lowered guidance and uncertainty over the
Japanese economy raise our apprehensions.
Recently, Hawaiian Electric lowered its earnings guidance for
2013. The lowered guidance reflects Maui Electric Company,
Limited's (MECO) 2012 test year final rate case decision and
order issued by the Public Utilities Commission of the State of
Other Stocks to Consider
Hawaiian Electric presently retains a Zacks Rank #3 (Hold).
Stocks worth considering in the energy space are Zacks Ranked #1
Huaneng Power International, Inc.
), and Zacks Ranked #2 (Buy) stocks
Brookfield Infrastructure Partners L.P.