Hawaiian Electric Industries (NYSE: HE) and Southern (NYSE:SO) are both mid-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitabiliy, dividends, valuation and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and recommmendations for Hawaiian Electric Industries and Southern, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hawaiian Electric Industries 2 0 0 0 1.00
Southern 3 7 2 0 1.92

Hawaiian Electric Industries presently has a consensus price target of $29.00, indicating a potential downside of 14.02%. Southern has a consensus price target of $51.50, indicating a potential upside of 1.62%. Given Southern’s stronger consensus rating and higher possible upside, analysts clearly believe Southern is more favorable than Hawaiian Electric Industries.

Institutional & Insider Ownership

45.5% of Hawaiian Electric Industries shares are owned by institutional investors. Comparatively, 51.6% of Southern shares are owned by institutional investors. 0.9% of Hawaiian Electric Industries shares are owned by company insiders. Comparatively, 1.0% of Southern shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Hawaiian Electric Industries and Southern’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hawaiian Electric Industries $2.42 billion 1.52 $553.33 million $2.27 14.86
Southern $21.68 billion 2.33 $8.21 billion $2.69 18.84

Southern has higher revenue and earnings than Hawaiian Electric Industries. Hawaiian Electric Industries is trading at a lower price-to-earnings ratio than Southern, indicating that it is currently the more affordable of the two stocks.

Profitability

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

Net Margins Return on Equity Return on Assets
Hawaiian Electric Industries 7.31% 8.66% 1.47%
Southern 14.14% 12.69% 3.25%

Dividends

Hawaiian Electric Industries pays an annual dividend of $1.24 per share and has a dividend yield of 3.7%. Southern pays an annual dividend of $2.24 per share and has a dividend yield of 4.4%. Hawaiian Electric Industries pays out 54.6% of its earnings in the form of a dividend. Southern pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southern has raised its dividend for 15 consecutive years. Southern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Hawaiian Electric Industries has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500. Comparatively, Southern has a beta of 0.05, indicating that its share price is 95% less volatile than the S&P 500.

Summary

Southern beats Hawaiian Electric Industries on 15 of the 17 factors compared between the two stocks.

Hawaiian Electric Industries Company Profile

Hawaiian Electric Industries, Inc. is a holding company with its principal subsidiaries engaged in electric utility and banking businesses operating primarily in the State of Hawaii. The Company’s subsidiaries include Hawaiian Electric Company, Inc. (Hawaiian Electric) and ASB Hawaii, Inc. (ASB Hawaii). Its segments include Electric utility, Bank and Other. It operates its electric utility business through Hawaiian Electric and its subsidiaries, Hawaii Electric Light Company, Inc. (Hawaii Electric Light) and Maui Electric Company, Limited (Maui Electric). It operates its Bank segment through ASB Hawaii’s subsidiary, American Savings Bank, F.S.B. (ASB). Its electric public utilities are in the business of generating, purchasing, transmitting, distributing and selling electric energy. ASB is a federally chartered savings bank providing a range of banking services to individual and business customers.

Southern Company Profile

The Southern Company (Southern Company) is a holding company. The Company owns all of the stock of the traditional electric operating companies and the parent entities of Southern Power Company (Southern Power) and Southern Company Gas, and owns other direct and indirect subsidiaries. The Company’s segments include Gas distribution operations, Gas marketing services, Wholesale gas services, Gas midstream operations and All other. The Gas distribution operations segment includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. The Gas marketing services segment provides natural gas commodity and related services to customers markets that provide for customer choice. The Wholesale gas services segment engages in natural gas storage and gas pipeline arbitrage. The Gas midstream operations consist primarily of gas pipeline investments, with storage and fuels.

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