Critical Survey: FirstEnergy (FE) & Hawaiian Electric Industries (HE)

FirstEnergy (NYSE:FE) and Hawaiian Electric Industries (NYSE:HE) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
FirstEnergy -4.60% 24.39% 3.74%
Hawaiian Electric Industries 6.78% 9.28% 1.51%

Volatility & Risk

FirstEnergy has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Hawaiian Electric Industries has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500.

Dividends

FirstEnergy pays an annual dividend of $1.44 per share and has a dividend yield of 3.9%. Hawaiian Electric Industries pays an annual dividend of $1.24 per share and has a dividend yield of 3.5%. FirstEnergy pays out 46.9% of its earnings in the form of a dividend. 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. FirstEnergy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares FirstEnergy and Hawaiian Electric Industries’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FirstEnergy $14.02 billion 1.27 -$1.72 billion $3.07 11.90
Hawaiian Electric Industries $2.56 billion 1.49 $167.18 million $1.65 21.24

Hawaiian Electric Industries has lower revenue, but higher earnings than FirstEnergy. FirstEnergy 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

94.4% of FirstEnergy shares are owned by institutional investors. Comparatively, 50.8% of Hawaiian Electric Industries shares are owned by institutional investors. 0.3% of FirstEnergy shares are owned by insiders. Comparatively, 0.9% of Hawaiian Electric Industries shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for FirstEnergy and Hawaiian Electric Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstEnergy 0 4 9 0 2.69
Hawaiian Electric Industries 1 3 0 0 1.75

FirstEnergy presently has a consensus target price of $38.30, suggesting a potential upside of 4.85%. Hawaiian Electric Industries has a consensus target price of $33.00, suggesting a potential downside of 5.85%. Given FirstEnergy’s stronger consensus rating and higher possible upside, equities analysts plainly believe FirstEnergy is more favorable than Hawaiian Electric Industries.

Summary

FirstEnergy beats Hawaiian Electric Industries on 10 of the 16 factors compared between the two stocks.

FirstEnergy Company Profile

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. The company operates through Regulated Distribution, Regulated Transmission, and Competitive Energy Services segments. It owns and operates coal-fired, nuclear, hydroelectric, oil and natural gas, wind, and solar power generating facilities. The company also provides energy-related products and services to retail and wholesale customers. It operates 24,493 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 276,555 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits, as well as owns substations with a total installed transformer capacity of approximately 164,470,215 kilovolt-amperes. The company serves approximately six million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was founded in 1996 and is headquartered in Akron, Ohio.

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.

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