After reading Hawaiian Electric Industries, Inc.’s (NYSE:HE) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
How HE fared against its long-term earnings performance and its industry
HE’s trailing twelve-month earnings (from 31 December 2018) of US$202m has jumped 22% 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 see if it is only due to industry tailwinds, or if Hawaiian Electric Industries has seen 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 9.2% instead. Furthermore, its return on assets (ROA) of 2.2% is below the US Electric Utilities industry of 4.2%, 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 3.8% to 3.7%.
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. Companies that have performed well in the past, such as Hawaiian Electric Industries gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you 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 31 December 2018. This may not be consistent with full year annual report figures.
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