Reviewing Hawaiian Electric Industries (NYSE:HE) & Pinnacle West Capital (NYSE:PNW)

Pinnacle West Capital (NYSE:PNW) and Hawaiian Electric Industries (NYSE:HE) are both utilities companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, valuation, analyst recommendations, profitability and earnings.

Dividends

Pinnacle West Capital pays an annual dividend of $2.95 per share and has a dividend yield of 3.2%. Hawaiian Electric Industries pays an annual dividend of $1.28 per share and has a dividend yield of 2.9%. Pinnacle West Capital pays out 65.0% of its earnings in the form of a dividend. Hawaiian Electric Industries pays out 69.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Pinnacle West Capital has raised its dividend for 7 consecutive years. Pinnacle West Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Pinnacle West Capital 13.84% 9.31% 2.84%
Hawaiian Electric Industries 7.07% 9.47% 1.55%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Pinnacle West Capital and Hawaiian Electric Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle West Capital 3 7 3 0 2.00
Hawaiian Electric Industries 2 1 0 0 1.33

Pinnacle West Capital currently has a consensus target price of $96.18, suggesting a potential upside of 4.21%. Hawaiian Electric Industries has a consensus target price of $36.33, suggesting a potential downside of 17.96%. Given Pinnacle West Capital’s stronger consensus rating and higher possible upside, equities analysts plainly believe Pinnacle West Capital is more favorable than Hawaiian Electric Industries.

Risk & Volatility

Pinnacle West Capital has a beta of 0.15, suggesting that its share price is 85% less volatile than the S&P 500. Comparatively, Hawaiian Electric Industries has a beta of 0.23, suggesting that its share price is 77% less volatile than the S&P 500.

Insider & Institutional Ownership

86.6% of Pinnacle West Capital shares are owned by institutional investors. Comparatively, 53.5% of Hawaiian Electric Industries shares are owned by institutional investors. 0.4% of Pinnacle West Capital shares are owned by insiders. Comparatively, 0.9% of Hawaiian Electric Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Pinnacle West Capital and Hawaiian Electric Industries’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pinnacle West Capital $3.69 billion 2.80 $511.05 million $4.54 20.28
Hawaiian Electric Industries $2.86 billion 1.69 $203.66 million $1.85 23.94

Pinnacle West Capital has higher revenue and earnings than Hawaiian Electric Industries. Pinnacle West Capital 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.

Summary

Pinnacle West Capital beats Hawaiian Electric Industries on 13 of the 17 factors compared between the two stocks.

About Pinnacle West Capital

Pinnacle West Capital Corporation, through its subsidiary, Arizona Public Service Company, provides retail and wholesale electric services primarily in the state of Arizona. It generates, transmits, and distributes electricity using coal, nuclear, gas, oil, and solar generating facilities. The company serves approximately 1.2 million customers. It owns or leases approximately 6,015 megawatts of regulated generation capacity. The company was incorporated in 1985 and is headquartered in Phoenix, Arizona.

About Hawaiian Electric Industries

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, 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 and checking accounts; 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. This segment operates 49 branches, including 34 branches in Oahu, 6 branches in Maui, 5 branches in Hawaii, 3 branches in Kauai, and 1 branch in Molokai. The company's Other segment focuses on investing in non-regulated renewable energy and infrastructure in the State of Hawaii. Hawaiian Electric Industries Inc. was founded in 1891 and is headquartered in Honolulu, Hawaii.

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