Stable Q4 from Hawaiian Electric - Analyst Blog

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Hawaiian Electric Industries Inc. ( HE ) announced fourth-quarter 2012 operating earnings of 39 cents per share, beating the Zacks Consensus Estimate of 32 cents. However, this came below the year-ago earnings of 42 cents per share.

Including one-time items of write-down of regulatory assets, GAAP earnings for the reported quarter were 14 cents per share versus 36 cents in the year-ago quarter.

Full year 2012 operating earnings came in at $1.68 per share, above the Zacks Consensus Estimate of $1.61 and full year 2011 earnings of $1.50 per share. On a reported basis, earnings came in at $1.42 for full year 2012 versus $1.44 in 2011.

Operating Statistics

Total revenue of the company at the end of the fourth quarter was $838.1 million versus $851.0 million in the year-ago quarter, reflecting a fall of 1.5%. Reported results, however, came in higher than the Zacks Consensus Estimate of $825 million. Full year 2012 revenue was $3.4 billion versus the Zacks Consensus Estimate of $3.3 billion. Full-year revenue also outdid the $3.2 billion generated a year ago.

Segment Net Income

Electric Utility: GAAP earnings from the utility for the fourth quarter of 2012 were $4.2 million compared with $25.8 million in 2011.  Core earnings were $28.7 million in the fourth quarter of 2012 compared with $31.5 million in the fourth quarter of 2011.  The core earnings decline from the prior-year quarter was primarily due to higher O&M expenses. This, however, was largely offset by the recovery of costs for clean energy and reliability investments, primarily related to Oahu and Maui utilities.

Banking: Hawaiian Electric's Banking segment recorded a net income of $14.4 million versus $14.2 million in the year-ago period. The upside came from higher non-interest income, driven mainly by higher gains on sales of newly originated residential mortgages. This was partially offset by higher non-interest expense and lower net interest income.

Other: Loss from this segment was $4.8 million in the reported quarter compared with a net loss of $6.9 million in the year-ago quarter.

Financial Update

Total cash and cash equivalents, as of Dec 31, 2012, were $219.7 million versus $270.3 million as of Dec 31, 2011. Cash generated from operations in 2012 totaled $234.5 million versus cash from operations of $250.4 million in the year-ago period. Long-term debt rose to $1.4 billion at year-end 2012 compared with $1.3 billion at year-end 2011.

Our View

Based in Honolulu, Hawaii, Hawaiian Electric, through its subsidiaries, primarily engages in electric utility and banking businesses primarily in the state of Hawaii.

Hawaiian Electric is the largest provider of electricity in the state of Hawaii, supplying more than 95% of the state's population. In contrast to its utility-only peers, the company also provides banking services to individual and commercial customers. Its banking subsidiary is one of the largest banks in Hawaii. Going forward, the major growth drivers of electricity consumption are tourism and construction, the two leading industries in Hawaii.

However, the present weak Hawaiian economy and uncertainty regarding the sustainable strength of the Japanese economy continue to weigh on the stock's valuation. The company presently retains a Zacks Rank #3 (Hold).

Other Stocks to Consider

Other stocks to consider are Ameren Corporation ( AEE ) with a Zacks Rank #1 (Strong Buy), and The AES Corporation ( AES ) and DTE Energy Company ( DTE ) that carry a Zacks Rank #2 (Buy).

Hawaiian Electric Industries Inc. ( HE ) announced fourth-quarter 2012 operating earnings of 39 cents per share, beating the Zacks Consensus Estimate of 32 cents. However this came below the year-ago earning of 42 cents per share.

Including one-time items of write-down of regulatory assets, GAAP earnings for the reported quarter were 14 cents per share versus 36 cents in the year-ago quarter.

Full year 2012 operating earnings came in at $1.68 per share, above the Zacks Consensus Estimate of $1.61 and full year 2011 earnings of $1.50 per share. On a reported basis earnings came in at $1.42 for full year 2012 versus $1.44 in 2011.

Operating Statistics

Total revenue of the company at the end of the fourth quarter was $838.1 million versus $851.0 million in the year-ago quarter, reflecting a fall of 1.5%. Reported results however came in higher than the Zacks Consensus Estimate of $825 million. Full year 2012 revenue was $3.4 billion versus the Zacks Consensus Estimate of $3.3 billion. Full year revenue also outdid the $3.2 billion generated a year ago.

Segment Net Income

Electric Utility: GAAP earnings from the utility for the fourth quarter of 2012 were $4.2 million compared with $25.8 million in 2011.  Core earnings were $28.7 million in the fourth quarter of 2012 compared with $31.5 million in the fourth quarter of 2011.  The core earnings decline from the prior-year quarter was primarily due to higher O&M expenses. This however was largely offset by the recovery of costs for clean energy and reliability investments, primarily related to Oahu and Maui utilities.

Banking: Hawaiian Electric's Banking segment recorded a net income of $14.4 million versus $14.2 million in the year-ago period. The upside came from higher non-interest income, driven mainly by higher gains on sales of newly originated residential mortgages. This was partially offset by higher non-interest expense and lower net interest income.

Other: Loss from this segment was $4.8 million in the reported quarter compared with a net loss of $6.9 million in the year-ago quarter.

Financial Update

Total cash and cash equivalents as of Dec 31, 2012, were $219.7 million versus $270.3 million as of Dec 31, 2011. Cash generated from operations in 2012 totaled $234.5 million versus cash from operations of $250.4 million in the year-ago period. Long-term debt rose to $1.4 billion at year-end 2012 compared with $1.3 billion at year-end 2011.

Our View

Based in Honolulu, Hawaii, Hawaiian Electric, through its subsidiaries, primarily engages in electric utility and banking businesses primarily in the state of Hawaii.

Hawaiian Electric is the largest provider of electricity in the state of Hawaii, supplying more than 95% of the state's population. In contrast to its utility-only peers, the company also provides banking services to individual and commercial customers. Its banking subsidiary is one of the largest banks in Hawaii. Going forward, the major growth drivers of electricity consumption are tourism and construction, the two leading industries in Hawaii.

However, the present weak Hawaiian economy and uncertainty regarding the sustainable strength of the Japanese economy continue to weigh on the stock's valuation. The company presently retains a short-term Zacks Rank #3 (Hold).

Other Stocks to Consider

Other stocks to consider are Ameren Corporation ( AEE ) with a Zacks Rank #1 (Strong Buy), and The AES Corporation ( AES ) and DTE Energy Company ( DTE ) that carry a Zacks Rank #2 (Buy).





AMEREN CORP (AEE): Free Stock Analysis Report

AES CORP (AES): Free Stock Analysis Report

DTE ENERGY CO (DTE): Free Stock Analysis Report

HAWAIIAN ELEC (HE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AEE , AES , DTE , HE

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