Critical Review: Hawaiian Electric Industries (HE) and CenterPoint Energy (CNP)

Hawaiian Electric Industries (NYSE:HE) and CenterPoint Energy (NYSE:CNP) are both utilities companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Hawaiian Electric Industries and CenterPoint Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hawaiian Electric Industries 1 3 0 0 1.75
CenterPoint Energy 0 4 4 0 2.50

Hawaiian Electric Industries presently has a consensus target price of $33.00, indicating a potential downside of 6.14%. CenterPoint Energy has a consensus target price of $29.00, indicating a potential upside of 6.07%. Given CenterPoint Energy’s stronger consensus rating and higher probable upside, analysts clearly believe CenterPoint Energy is more favorable than Hawaiian Electric Industries.

Risk and Volatility

Hawaiian Electric Industries has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Valuation and Earnings

This table compares Hawaiian Electric Industries and CenterPoint Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hawaiian Electric Industries $2.56 billion 1.50 $167.18 million $1.65 21.31
CenterPoint Energy $9.61 billion 1.43 $1.79 billion $1.37 19.96

CenterPoint Energy has higher revenue and earnings than Hawaiian Electric Industries. CenterPoint Energy is trading at a lower price-to-earnings ratio than Hawaiian Electric Industries, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

50.8% of Hawaiian Electric Industries shares are held by institutional investors. Comparatively, 77.4% of CenterPoint Energy shares are held by institutional investors. 0.9% of Hawaiian Electric Industries shares are held by insiders. Comparatively, 0.2% of CenterPoint Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Hawaiian Electric Industries pays an annual dividend of $1.24 per share and has a dividend yield of 3.5%. CenterPoint Energy pays an annual dividend of $1.11 per share and has a dividend yield of 4.1%. Hawaiian Electric Industries pays out 75.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CenterPoint Energy pays out 81.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CenterPoint Energy has increased its dividend for 12 consecutive years. CenterPoint Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Hawaiian Electric Industries and CenterPoint Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hawaiian Electric Industries 6.78% 9.28% 1.51%
CenterPoint Energy 15.43% 10.73% 2.14%

Summary

CenterPoint Energy beats Hawaiian Electric Industries on 12 of the 17 factors compared between the two stocks.

Hawaiian Electric Industries Company Profile

Hawaiian Electric Industries, Inc., through its subsidiaries, engages in the electric utility and banking businesses primarily in the state of Hawaii. The company's Electric Utility segment is involved in generating, purchasing, transmitting, distributing, and selling electric energy. Its renewable energy sources and potential sources include wind, solar, photovoltaic, geothermal, wave, hydroelectric, sugarcane waste, municipal waste, and other bio fuels. This segment distributes and sells electricity on the islands of Oahu, Hawaii, Maui, Lanai, and Molokai; and serves suburban communities, resorts, the United States armed forces installations, and agricultural operations. Its Bank segment operates a savings bank that offers banking and other financial services, including deposit products, such as savings accounts, checking accounts, money market accounts, and certificates of deposit; and loans comprising residential and commercial real estate, residential mortgage, construction and development, multifamily residential and commercial real estate, consumer, and commercial loans to consumers and business. Hawaiian Electric Industries Inc. was founded in 1891 and is headquartered in Honolulu, Hawaii.

CenterPoint Energy Company Profile

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company's Electric Transmission & Distribution segment offers electric transmission and distribution services to retail electric providers, municipalities, electric cooperatives, and other distribution companies. As of December 31, 2017, this segment owned 28,883 pole miles of overhead distribution lines and 24,662 circuit miles of underground distribution lines; and 235 substations with a transformer capacity of 64,924 megavolt amperes, as well as operated 14 regional service centers. Its Natural Gas Distribution segment sells regulated intrastate natural gas; provides natural gas transportation and storage services for residential, commercial, industrial, and transportation customers; and offers unregulated services comprising residential appliance repair and maintenance services. As of December 31, 2017, this segment owned approximately 75,000 linear miles of natural gas distribution mains. The company's Energy Services segment provides physical natural gas supplies primarily to commercial and industrial customers, and electric and natural gas utilities; natural gas management services; and physical delivery services, as well as procures and optimizes transportation and storage assets. This segment owns and operates approximately 200 miles of intrastate pipelines; and leases transportation capacity on various interstate and intrastate pipelines, and storage. Its Midstream Investments segment offers natural gas and crude oil gathering, and natural gas processing services to its producer customers; and interstate and intrastate natural gas pipeline transportation and storage services to its producer, power plant, local distribution company, and industrial end-user customers. The company was founded in 1882 and is based in Houston, Texas.

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