Hawaiian Electric Industries (NYSE: HE) and ALLETE (NYSE:ALE) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, risk, profitability, valuation, dividends, institutional ownership and analyst recommendations.
Insider and Institutional Ownership
49.2% of Hawaiian Electric Industries shares are owned by institutional investors. Comparatively, 73.2% of ALLETE shares are owned by institutional investors. 0.9% of Hawaiian Electric Industries shares are owned by company insiders. Comparatively, 0.4% of ALLETE shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Hawaiian Electric Industries pays an annual dividend of $1.24 per share and has a dividend yield of 3.6%. ALLETE pays an annual dividend of $2.14 per share and has a dividend yield of 2.9%. Hawaiian Electric Industries pays out 76.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ALLETE pays out 61.8% of its earnings in the form of a dividend. Hawaiian Electric Industries has raised its dividend for 7 consecutive years. Hawaiian Electric Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Hawaiian Electric Industries and ALLETE’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Hawaiian Electric Industries||7.14%||8.64%||1.42%|
Earnings & Valuation
This table compares Hawaiian Electric Industries and ALLETE’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hawaiian Electric Industries||$2.38 billion||1.56||$250.14 million||$1.63||20.99|
|ALLETE||$1.34 billion||2.80||$155.30 million||$3.46||21.24|
Hawaiian Electric Industries has higher revenue and earnings than ALLETE. Hawaiian Electric Industries is trading at a lower price-to-earnings ratio than ALLETE, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Hawaiian Electric Industries has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, ALLETE has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for Hawaiian Electric Industries and ALLETE, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Hawaiian Electric Industries||3||1||0||0||1.25|
Hawaiian Electric Industries presently has a consensus price target of $32.33, indicating a potential downside of 5.49%. ALLETE has a consensus price target of $77.67, indicating a potential upside of 5.70%. Given ALLETE’s stronger consensus rating and higher probable upside, analysts plainly believe ALLETE is more favorable than Hawaiian Electric Industries.
ALLETE beats Hawaiian Electric Industries on 10 of the 16 factors compared between the two stocks.
About Hawaiian Electric Industries
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.
ALLETE, Inc. is an energy company. The Company’s segments include Regulated Operations, ALLETE Clean Energy, Inc. (ALLETE Clean Energy), U.S. Water Services Holding Company (U.S. Water Services), and Corporate and Other. The Regulated Operations segment includes its regulated utilities, Minnesota Power, and Superior Water, Light and Power Company, and its investment in American Transmission Company LLC. The ALLETE Clean Energy segment focuses on developing, acquiring and operating clean and renewable energy projects. The U.S. Water Services provides integrated water management for industry by combining chemical, equipment, engineering and service for customized solution. As of December 31, 2016, its Corporate and Other consisted of BNI Energy, Inc. (BNI Energy), its coal mining operations in North Dakota, ALLETE Properties, LLC (ALLETE Properties), its Florida real estate investment and approximately 5,000 acres of land in Minnesota.
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