HAWAIIAN ELECTRIC INDUSTRIES, INC. (HE): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/HE

Headline

Field	Value
Ticker	HE
Company	HAWAIIAN ELECTRIC INDUSTRIES, INC.
Current price	$13.13/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	4.3%
Operating margin today	7.3%
Margin compression (value-band)	-3.0pp
Implied growth	3.2%
Multiple paid	21x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.9pp.

Reconcile: at the x-ray's 9.3% required return this reads ~17.7%/yr; the models below use their own rates.

How unusual the bet is: within-range

Reference	Value
vs own history	+0.22σ
cohort percentile (of 72 peers)	46
implied end-window share	0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple value, while asset-based/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	1.75x	5	expensive
Earnings	1.10x	2	expensive
Relative	0.47x	5	justifies
Growth	1.89x	2	expensive

Families that justify the price: Earnings, Relative Families that call it expensive: Asset, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.0%); the inversion above states its own rate.

Per-Model Detail (n=14)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$0.00	—	no	FCF base $0.0B, growth -3% (input: historical growth), terminal g 0.5%, WACC 5.0%, 5yr projection
DCF Exit Multiple	Growth	$8.22	1.60x	yes	Exit EV/EBITDA: 6.0x / 8.0x / 10.0x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$21.72	0.60x	yes	P/E 20x (static sector reference · 2026-04), scenarios: 16.9x / 20.0x / 23.1x (bear / base = reference held flat / bull), EV/EBITDA 13x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$8.11	1.62x	yes	BV/sh $9.45, ROE (TTM) 7.9%, ke 9.3%
Two-Stage Excess Return	Asset	$7.51	1.75x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$6.02	2.18x	yes	Rev $3.1B, growth -3% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$25.90	0.51x	yes	EPS $0.74, growth 35% (input: historical EPS growth), PEG=0.50 (Undervalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	$7.41	1.77x	yes	BV $9.45 + 5yr PV of (ROE (TTM) 7.9% − Kₑ 9.3%) × BV; BV grows 5.2%/yr
Graham Number	Asset	$12.54	1.05x	yes	√(22.5 × EPS $0.74 × BVPS $9.45) — Graham's conservative floor
EV/EBITDA Relative	Relative	$28.63	0.46x	yes	EBITDA $0.53B × sector EV/EBITDA 13.0x
FCF Yield	Earnings	$0.01	1313.00x	yes	FCF $44.2M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	$23.88	0.55x	yes	EPS $0.74 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$2.20	5.97x	yes	BV $9.45 × (ROIC 1.2% / WACC 5.0%)
P/Sales Sector	Relative	$44.51	0.29x	yes	Revenue $3.09B × sector P/S 2.5x
PEG Fair Value	Relative	$27.75	0.47x	yes	EPS $0.74 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$8.00	1.64x	yes	EPS $0.74 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$2.3b
Net debt / NOPAT (after-tax)	13.05x
Net debt / operating income (pre-tax)	10.30x
Interest coverage	2.0x
Share count CAGR (dilution)	1.3%
Burning cash	no

Bullet Takeaways

• Hawaiian Electric has begun paying its Maui wildfire settlement, making the first of four annual $479 million payments in April 2026 and earning a credit-rating upgrade as the worst-case uncertainty narrows.
• The defining risk is the balance sheet: net debt sits near 10 times operating income with interest coverage around 2 times, and three more settlement payments must still be financed.
• Watch the rate case and securitization: a joint proposal seeks a 5.3% base-rate increase over two years, and Act 258 securitization could fund wildfire-safety investment without crushing customer bills.

Bull Case

Start with where the price sits against the methods, because for Hawaiian Electric the spread is the whole bull case. The relative-multiple and peer methods read the stock as cheap, landing well above today's price, while the asset-value and growth-oriented methods read it as expensive. That split is what you would expect from a regulated utility emerging from a catastrophe: the earnings-power and peer lenses see a monopoly electric provider that, once the litigation overhang clears, should trade like other utilities; the asset and growth methods are still penalizing the depressed returns and the wildfire scar. The bull thesis is that the company moves from the second framing toward the first.

The de-risking is concrete, not hypothetical. Hawaiian Electric satisfied all final settlement conditions and made the first of four annual $479 million payments in April 2026, and wildfire-related expenses fell to $1.5 million after tax in the quarter from $12.6 million a year earlier, the signature of a company moving from crisis management to ongoing risk mitigation. The settlement itself, entered effective November 1, 2024, replaced an open-ended legal liability with a defined payment schedule. A known cost is far easier for the market to price than an unbounded one, and the rating agencies have started to acknowledge it with an upgrade.

Underneath the headline is an ordinary, valuable thing: a regulated electric monopoly on the Hawaiian islands. Utilities recover their costs through rates, and the company describes how its requirements for operations, fuel, debt, and interest are "generally funded through the collection of the Utilities' re" venue under regulatory rate-setting. A joint proposal filed in March seeks a 5.3% base-rate increase over two years, and Act 258 securitization offers a path to fund roughly $350 million of wildfire-safety investment while limiting the bill impact on customers. If the settlement financing goes smoothly and the rate case lands, the bull case is a normal utility multiple applied to a company the market has been pricing for disaster.

Bear Case

The disconnect that should worry a buyer is not in any single ratio; it is that the price has begun to credit a recovery the balance sheet has not yet earned. Hawaiian Electric is a small utility carrying a very large, multi-year obligation, and it has front-loaded its risk: it has paid the first $479 million of four annual settlement payments, with three more to come. The company has been clear that future payments will draw on a mix of debt and equity, with the April 2028 payment currently expected to come from debt or convertible bonds, subject to market conditions. That single sentence contains the bear case: the company does not yet know exactly how it will fund the remaining obligation, and each financing round either dilutes existing holders or adds to an already heavy debt load.

The leverage is the hard constraint. Net debt sits near 10 times operating income and interest coverage is only about 2 times, a precarious cushion for a company that must keep accessing capital markets to meet its settlement schedule. The filing is explicit that the recorded settlement amount "is not intended to provide a reasonably possible loss in excess of the recorded amount" under loss-contingency accounting, which is a careful way of saying the booked liability is the estimate, not a ceiling on every conceivable outcome. A utility this thinly covered has almost no margin for a financing cost spike, a rate-case denial, or any further wildfire-related claim.

The operating numbers underline how little is improving beneath the de-risking narrative. Core earnings per share were $0.18 in the quarter, flat year over year, as higher operating and maintenance expenses offset revenue gains. The growth-oriented and asset-based valuation methods read the stock as expensive precisely because the returns are depressed and the growth is not there yet. The proposed rate increase, if approved, raises customer bills $8 to $12 a month in 2027, which is its own political and regulatory risk on an island grid already under scrutiny. The price is starting to pay for a clean utility, while the company is still a heavily indebted one with three settlement payments and an unfinished financing plan ahead of it.

Valuation

At about $13 (June 27, 2026) Hawaiian Electric trades near 21 times company-wide operating income, which inverts into an assumption of roughly 3.9% annual operating-profit growth over five years. That is a modest pace within what the company has recently delivered, so the headline assumption reads as within range. The complication is that the operating income itself is depressed and the comparison data is thin, so the multiple says less here than it would for a stable utility.

The method spread is the more revealing read, and it is unusually wide. The relative-multiple and peer methods land well above the price, valuing the company as the regulated electric monopoly it structurally is. The asset-value and growth-oriented methods land below it, penalizing the depressed return on equity near 8% and the absence of growth. That divergence is the wildfire overhang showing up in the numbers: the market cannot yet decide whether to price Hawaiian Electric as a recovering utility or as a distressed one, and the truth depends on the settlement financing and the rate case landing as hoped. The peer cohort the screen surfaces leans toward midstream energy names rather than pure regulated utilities, so the cleaner comparison is to other regulated electrics, and against those the relative methods say the stock is inexpensive if the recovery holds.

Solvency is where the caution has to live, and it is the load-bearing fact. Net debt near 10 times operating income with interest coverage of only about 2 times is a stretched profile for any company, let alone one that must fund three more annual $479 million payments. The company is not currently burning cash at the operating line, and utility revenue is regulated and predictable, but the financing plan for the remaining settlement is unsettled and will mean more debt, more equity, or both. What a buyer underwrites at this price is a bet that the de-risking continues, the rate case is approved, and the remaining payments are financed without distress, with the thin coverage as the reminder of how little room there is for any of those to go wrong.

Catalysts

The pivotal event of Hawaiian Electric's recent quarter was the start of its Maui wildfire settlement payments. The company satisfied all final settlement conditions on April 10, 2026, and made the first of four annual $479 million payments, with wildfire-related expenses dropping to $1.5 million after tax in the quarter from $12.6 million a year earlier. Core earnings per share were $0.18, flat year over year, as higher operating and maintenance costs offset revenue gains. The progress on the settlement also brought a Moody's credit-rating upgrade, an external signal that the worst-case uncertainty is narrowing.

The financing of the remaining obligation is the central forward question. Future settlement payments will use a mix of debt and equity, and the April 2028 payment is currently expected to be funded by debt or convertible bonds, subject to market conditions. That plan is not yet fixed, which keeps a financing overhang on the stock.

Two regulatory catalysts matter most over the next year. A joint proposal filed March 6 seeks a 5.3% increase in consolidated base rates over two years, which would lift average monthly bills $8 to $12 in 2027 and a further $2 to $3 in 2028 by island. Separately, an application for roughly $350 million in wildfire-safety investment awaits Commission approval, with Act 258 securitization offering a path to finance it while limiting customer rate impact. Both outcomes feed directly into the de-risking thesis.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• ED (CONSOLIDATED EDISON INC)
• FY2025 10-K: …for the Utilities, and for the nonregulated entities. CECONY's CODMs are regularly provided with CECONY's operating income to assess performance and allocate resources, including drivers of budget variances by CECONY's principal business segments. Con Edison's principal business segments are CECONY's regulated…
• FY2025 10-K: …Clean Energy Businesses. As a result of this sale, the Clean Energy Businesses are no longer a principal segment. See Note W and Note X. (b) Other includes the parent company, Con Edison's tax equity interests, consolidation adjustments and Broken Bow II, the deferred project that was classified as held for sale at…
• AQN (ALGONQUIN POWER & UTILITIES CORP.)
• FY2025 40-F: …31, 2024 that do not represent revenue recognized from contracts with customers. (2) Reflect results of continuing operations. (3) Excluding held for sale assets of $ 3,695.6 million. Algonquin Power & Utilities Corp. Notes to the Consolidated Financial Statements December 31, 2025 and 2024 (in millions of U.S.…
• FY2025 40-F: …from equity investments $ - $ 86.3 Non-cash financing and investing activities: Increase (decrease) in accrued capital expenditure $ ( 121.4 ) $ 84.7 Issuance of common shares under share-based compensation plans $ 10.4 $ 11.3 Property, plant and equipment, intangible assets and accrued liabilities in exchange of…
• VST (Vistra Corp.)
• FY2025 10-K: …our customers, and the communities where we live and do business. We will maintain productive and respectful relationships with our elected officials, regulators, and community leaders. We strive to achieve the full value of our enterprise for our investors. To align with our four core principles, our focus is on the…
• FY2025 10-K: …59,974 59,066 Total retail electricity sales volumes 139,139 133,361 Retail net income increased due to higher retail margins driven by strong counts and one-time gains from supply cost management and an increase in customer consumption primarily due to weather, partially offset by a $96 million increase in…
• BEPC (BROOKFIELD RENEWABLE CORPORATION)
• FY2025 20-F: …to inflation indexation and recontracting initiatives was offset by unfavorable hydrology conditions in the U.S. and Brazil. WIND OPERATIONS ON A PROPORTIONATE BASIS The following table presents our proportionate results for wind operations for the year ended December 31: (MILLIONS) 2024 2023 Revenue $ 223 $ 152…
• FY2025 20-F: …Funds From Operations at our utility-scale solar business was $169 million versus $94 million in the prior year due to the benefits of growth in our business and gains related to the sale of a European development portfolio. DISTRIBUTED ENERGY & SUSTAINABLE SOLUTIONS OPERATIONS ON A PROPORTIONATE BASIS The following…
• UGI (UGI CORPORATION)
• FY2025 10-K: (3) UGI International; and (4) AmeriGas Propane. Our Utilities segment primarily derives its revenues from the sale and distribution of natural gas to customers in eastern and central Pennsylvania and in West Virginia. To a much lesser extent, Utilities also derives revenues from the sale and distribution of…
• FY2025 10-K: Subsidiaries Notes to Consolidated Financial Statements (Currency in millions, except per share amounts and where indicated otherwise) 2023 Total Eliminations (a) Utilities Midstream & Marketing UGI International AmeriGas Propane Corporate & Other Revenues from contracts with customers: Utility: Core Market:…
• NJR (NEW JERSEY RESOURCES CORPORATION)
• FY2025 10-K: …of NJNG. NJNG's Utility Gross Margin is defined as operating revenues less natural gas purchases, sales tax and regulatory rider expenses. This measure differs from gross margin as presented on a GAAP basis, as it excludes certain operations and maintenance expense and depreciation and amortization. Utility Gross…
• FY2025 10-K: …in base rates, effective November 21, 2024. Page 43 New Jersey Resources Corporation Part II ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) BGSS Incentive Programs The factors contributing to the change in Utility Gross Margin generated by BGSS incentive…
• CWT (CALIFORNIA WATER SERVICE GROUP)
• FY2025 10-K: …if applicable, to evaluate management's judgments in determining the probability that incurred cost will be recovered in future rates and in determining the probability the Commission will require a refund to be made to the Company's customers over future periods in accounting for regulatory assets and liabilities. •…
• FY2025 10-K: …The second largest component of our operating costs after water production is made up of salaries and wages. These costs are affected by the local supply and demand for qualified labor. Other large components of our costs are general insurance, workers compensation insurance, employee benefits, and health insurance…
• HTO (H2O AMERICA)
• FY2025 10-K: …purchase price of $483,600 will serve as the ratemaking rate base. TWC filed its STM application with the PUCT in January 2026. Reportable Segment Water Utility Services is our single reportable segment. Other business activities that are not separately reportable segments are SJWC's City of Cupertino service…
• FY2025 10-K: …amounts. Certain corporate costs and expenses are not allocated to Water Utility Services or Other Services and are shown separately to reconcile to the applicable consolidated amounts. 86 Table of Contents For the year ended December 31, 2025 Reportable Segment Water Utility Services Other Services (1) Unallocated…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

HE Q1 2026 results, May 2026 · HE FY2025 10-K