TSC Ratings' Updates: Hawaiian Electric Industries

The following ratings' changes were generated on September 30, 2008.

Hawaiian Electric Industries(HE Quote) has been upgraded from hold to buy. Hawaiian Electric Industries, through its subsidiaries, engages in electric utility, banking and other businesses primarily in the state of Hawaii. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenue rose by 28.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Compared with its closing price of one year ago, HE's share price has jumped by 34.91%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared with the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

HE has experienced a steep decline in earnings per share in the most-recent quarter in comparison with its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, HE reported lower earnings of $1.02 vs. $1.33 in the prior year. This year, the market expects an improvement in earnings ($1.66 vs. $1.02).

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