Investment Thesis
Hawaiian Electric faces critical financial distress with interest coverage of 0.3x, unable to service debt from operations. Negative free cash flow of -$42.5M combined with stagnant revenue growth (0.4% YoY), poor returns (ROE 1.9%, ROA 0.3%), and elevated leverage (Debt/Equity 1.39x) indicate fundamental structural weakness that recent net income improvement cannot resolve.
Strengths
- Stable essential utility business with $746.4M in steady-state revenue
- Net income surged 108.6% YoY with diluted EPS growth of 106.3%
- Adequate short-term liquidity with current ratio of 1.34x and $452.8M cash position
Risks
- Interest coverage ratio of 0.3x is critically low - operating income covers only 30% of interest obligations, indicating severe solvency stress
- Negative free cash flow of -$42.5M requires external financing to fund operations and capex, creating refinancing risk
- Elevated leverage (Debt/Equity 1.39x) combined with extremely poor returns (ROE 1.9%, ROA 0.3%) signals capital is inefficiently deployed
- Revenue growth of 0.4% YoY is stagnant, limiting organic growth and debt repayment capacity
- Net margin of 4.1% and operating capex exceeding operating cash flow leave no safety margin for adverse conditions
Key Metrics to Watch
- Interest coverage ratio - must improve above 1.0x minimum for financial viability
- Operating cash flow vs. capital expenditure - trending to positive free cash flow is essential
- Debt service obligations and refinancing schedule relative to operating cash generation
Financial Metrics
Revenue
746.4M
Net Income
30.5M
EPS (Diluted)
$0.18
Free Cash Flow
-42.5M
Total Assets
8.9B
Cash
452.8M
Profitability Ratios
Gross Margin
N/A
Operating Margin
7.2%
Net Margin
4.1%
ROE
1.9%
ROA
0.3%
FCF Margin
-5.7%
Balance Sheet & Liquidity
Current Ratio
1.34x
Quick Ratio
1.34x
Debt/Equity
1.39x
Debt/Assets
81.6%
Interest Coverage
0.26x
Long-term Debt
2.3B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-10T07:31:54.261673 |
Data as of: 2026-03-31 |
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