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Hawaiian Electric: Company Seeks Restructuring Advice; Fair Value Lowered, Uncertainty Up to Extreme

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We are lowering our Hawaiian Electric HE fair value estimate to $13 per share from $17 as we continue to assess the impacts of the wildfires in the utility’s service territory.

We’ve increased our Morningstar Uncertainty Rating to Extreme, from Very High, to account for the wide range of possible outcomes from lawsuits filed against the company. The company has sought restructuring advice, according to news reports.

With Hawaiian’s small market cap and with approximately one third of the firm’s shares trading daily during the past week, we continue to expect significant daily stock price volatility.

We also increased our estimate for wildfire liabilities based on news reports from outlets such as The Wall Street Journal suggesting Hawaiian Electric’s equipment started the Maui wildfire. Our new, higher liability estimate led to our fair value estimate decrease.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Andrew Bischof

Strategist
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Andrew Bischof, CFA, CPA, is an equity strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers regulated utilities, diversified utilities, and independent power producers.

Before joining Morningstar in 2011, Bischof was a senior treasury analyst for Mead Johnson Nutrition. Previously, he was a group audit officer for Bank of America in Chicago, and before that, an auditor for Ernst & Young.

Bischof holds a bachelor’s degree in business administration and accounting and a master’s degree in accounting from the University of Wisconsin. He also holds a master’s degree in business administration, with a concentration in finance, from Indiana University’s Kelley School of Business and the Chartered Financial Analyst® and Certified Public Accountant designations.

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