When Hawaiian Electric Industries, Inc. (NYSE:HE) announced its most recent earnings (30 September 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Hawaiian Electric Industries performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see HE has performed.
How Did HE's Recent Performance Stack Up Against Its Past?
HE's trailing twelve-month earnings (from 30 September 2019) of US$201m has increased by 9.0% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.4%, indicating the rate at which HE is growing has accelerated. How has it been able to do this? Let's take a look at whether it is only because of industry tailwinds, or if Hawaiian Electric Industries has experienced some company-specific growth.
In terms of returns from investment, Hawaiian Electric Industries has fallen short of achieving a 20% return on equity (ROE), recording 8.8% instead. Furthermore, its return on assets (ROA) of 2.2% is below the US Electric Utilities industry of 4.5%, indicating Hawaiian Electric Industries's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Hawaiian Electric Industries’s debt level, has declined over the past 3 years from 2.9% to 2.5%.
What does this mean?
Hawaiian Electric Industries's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Hawaiian Electric Industries to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HE’s future growth? Take a look at our free research report of analyst consensus for HE’s outlook.
- Financial Health: Are HE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
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