Critical Review: Hawaiian Electric Industries (NYSE:HE) vs. CEMIG (NYSE:CIG)

Hawaiian Electric Industries (NYSE:HEGet Rating) and CEMIG (NYSE:CIGGet Rating) are both mid-cap utilities companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Insider & Institutional Ownership

53.3% of Hawaiian Electric Industries shares are held by institutional investors. Comparatively, 3.1% of CEMIG shares are held by institutional investors. 0.9% of Hawaiian Electric Industries shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Hawaiian Electric Industries 6.88% 10.57% 1.50%
CEMIG 8.05% 13.90% 5.36%

Volatility & Risk

Hawaiian Electric Industries has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, CEMIG has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Hawaiian Electric Industries and CEMIG, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hawaiian Electric Industries 2 1 0 0 1.33
CEMIG 0 0 0 0 N/A

Hawaiian Electric Industries presently has a consensus price target of $38.75, indicating a potential downside of 0.23%. Given Hawaiian Electric Industries’ higher probable upside, analysts plainly believe Hawaiian Electric Industries is more favorable than CEMIG.

Dividends

Hawaiian Electric Industries pays an annual dividend of $1.40 per share and has a dividend yield of 3.6%. CEMIG pays an annual dividend of $0.04 per share and has a dividend yield of 2.0%. Hawaiian Electric Industries pays out 64.2% of its earnings in the form of a dividend. CEMIG pays out 10.3% 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. Hawaiian Electric Industries has raised its dividend for 4 consecutive years and CEMIG has raised its dividend for 1 consecutive years. Hawaiian Electric Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Hawaiian Electric Industries and CEMIG’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hawaiian Electric Industries $2.85 billion 1.49 $248.06 million $2.18 17.82
CEMIG $6.24 billion 0.71 $695.06 million $0.39 5.16

CEMIG has higher revenue and earnings than Hawaiian Electric Industries. CEMIG 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

Hawaiian Electric Industries beats CEMIG on 8 of the 15 factors compared between the two stocks.

About Hawaiian Electric Industries

(Get Rating)

Hawaiian Electric Industries, Inc., together with its subsidiaries, engages in the electric utility, banking, and renewable/sustainable infrastructure investment businesses in the state of Hawaii. It operates in three segments: Electric Utility, Bank, and Other. The Electric Utility segment engages in the production, purchase, transmission, distribution, and sale of electricity in the islands of Oahu, Hawaii, Maui, Lanai, and Molokai. Its renewable energy sources and potential sources include wind, solar, photovoltaic, geothermal, wave, hydroelectric, municipal waste, and other biofuels. This segment serves suburban communities, resorts, the United States armed forces installations, and agricultural operations. The Bank segment operates a community bank that offers banking and other financial services to consumers and businesses, including savings 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. This segment operates 42 branches, including 29 branches in Oahu, 6 branches in Maui, 4 branches in Hawaii, 2 branches in Kauai, and 1 branch in Molokai. The Other segment invests in non-regulated renewable energy and sustainable infrastructure in the State of Hawaii. Hawaiian Electric Industries Inc. was incorporated in 1891 and is headquartered in Honolulu, Hawaii.

About CEMIG

(Get Rating)

Companhia Energ├ętica de Minas Gerais, through its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in Brazil. The company generates electricity through renewable energy sources, such as water, wind, sun, and biomass; or non-renewable sources, including fossil and nuclear fuels. As of December 31, 2016, it operated hydroelectric plants, thermoelectric plants, and solar plants with a total installed capacity of approximately 8,000 megawatts in 10 states of Brazil. It is also involved in the telecommunications and energy solutions consulting businesses; exploitation of natural gas; sale and trading of electricity; and acquisition, transport, and distribution of gas and its subproducts and derivatives, as well as provision of technology systems and systems for operational management of public service concessions, including companies operating in electricity, gas, water and sewerage, and other utility companies. The company was founded in 1952 and is headquartered in Belo Horizonte, Brazil.

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