NEW YORK (TheStreet) -- Hawaiian Electric (HE) shares are down -1.8% to $25.05 on Thursday after being downgraded to "cautious" from "neutral" by analysts at ISI Group.
The downgrade is a valuation call by the firm on the company's shares which peaked at $25.52 by market close Wednesday.
Must Read: Warren Buffett's 25 Favorite Stocks
TheStreet Ratings team rates HAWAIIAN ELECTRIC INDS as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HAWAIIAN ELECTRIC INDS (HE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HAWAIIAN ELECTRIC INDS has improved earnings per share by 32.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HAWAIIAN ELECTRIC INDS increased its bottom line by earning $1.62 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $1.62).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electric Utilities industry average. The net income increased by 35.9% when compared to the same quarter one year prior, rising from $34.15 million to $46.40 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, HAWAIIAN ELECTRIC INDS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for HAWAIIAN ELECTRIC INDS is rather low; currently it is at 16.98%. Regardless of HE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.92% trails the industry average.
- Net operating cash flow has significantly decreased to $19.42 million or 59.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: HE Ratings Report