Breaking Down Hawaiian Electric Industries, Inc. (HE) Financial Health: Key Insights for Investors

You are defintely looking at a utility stock in a high-stakes transition, not a sleepy dividend play, and the numbers from the 2025 fiscal year tell a story of both critical stabilization and persistent, deep-seated risk. While Hawaiian Electric Industries, Inc. reported a Q3 2025 core net income of $32.8 million, translating to $0.19 per share, which signals a core business rebound, you can't ignore the balance sheet pressure. The company's debt-to-equity ratio sits at a leveraged 1.52, and the Altman Z-Score of 0.45 still places them squarely in the financial distress zone, which is a major red flag for any seasoned investor. The company is committing to an estimated $400 million in capital expenditure (CapEx) for 2025, plus they have secured liquidity with a $500 million unsecured debt offering, all to fund essential grid hardening and manage the fallout from the Maui wildfire tort litigation, including the $479 million in restricted cash for the first settlement payment expected early next year. The question isn't just about revenue, which hit $790.61 million in Q3 2025; it's about whether the regulatory and legislative wins-like the potential for securitization-will outpace the immense capital demands and ongoing liability concerns. The Altman Z-Score of 0.45 tells you this isn't a simple utility play, so let's break down exactly what these financial moves mean for your investment decision and what near-term actions you should consider.

Revenue Analysis

If you're looking at Hawaiian Electric Industries, Inc. (HE), the direct takeaway is simple: this is now almost entirely a utility play. The company has made a strategic pivot, so your focus needs to be on the regulated electricity business and the mechanisms driving its revenue. This simplification is defintely a risk-mitigating move.

For the trailing twelve months (TTM) ended September 30, 2025, Hawaiian Electric Industries, Inc. reported consolidated revenue of approximately $3.08 billion, marking a year-over-year growth of about 3.28%. However, a deeper look at the quarterly numbers shows the volatility you need to track. For instance, Q3 2025 revenue of $790.61 million was actually a decrease of 5.12% compared to the same quarter last year.

Primary Revenue Streams and Segment Contribution

The company's revenue is overwhelmingly concentrated in its Electric Utility segment, which provides power to about 95% of Hawaii's population across five islands. This concentration is a deliberate outcome of the company's strategy to simplify its business model and focus on the core utility operations, especially following the Maui wildfires.

Here's the quick math on where the money comes from, based on the Q3 2025 results:

• Electric Utility Revenue: $787.43 million
• All Other (Holding and non-reportable segments) Revenue: $3.18 million
• Total Consolidated Revenue: $790.61 million

What this estimate hides is the former contribution of American Savings Bank (ASB), which was sold in December 2024 and is now reported as discontinued operations. The 'All Other' segment is now a tiny fraction, so you can see the utility segment contributes a massive 99.60% of the consolidated revenue.

Near-Term Revenue Drivers and Changes

The key driver for the utility's revenue growth is the Annual Revenue Adjustment mechanism (ARA). This is a regulatory tool-common in the utility space-that allows the utility to adjust rates to recover costs and earn a regulated return, which is a more stable revenue source than traditional rate cases. In Q3 2025, Hawaiian Electric Company saw an increase of $6 million in higher revenues, primarily from this ARA mechanism.

The most significant change is the simplification of the corporate structure. The sale of 90.1% of American Savings Bank (ASB) and the completed sale of the Pacific Current segment's largest asset, Hamakua Energy, in Q1 2025, means the company is shedding non-core, non-regulated assets. This reduces complexity, but it also means the utility's performance is now the singular determinant of the company's financial health. You can read more on the overall financial health in Breaking Down Hawaiian Electric Industries, Inc. (HE) Financial Health: Key Insights for Investors.

The legislative progress on a Public Utilities Commission-set wildfire liability cap and authorization for securitization to finance wildfire safety improvements are also crucial, as they remove a significant tail risk that was clouding the revenue outlook. This regulatory clarity helps stabilize the utility's ability to invest and recover costs, which is fundamental to a regulated revenue model.

Profitability Metrics

You're looking for a clear picture of Hawaiian Electric Industries, Inc. (HE) financial health, and the profitability numbers tell a story of a regulated utility under extraordinary pressure. The key takeaway is simple: while core operations show resilience, the trailing twelve-month (TTM) net profitability is deeply negative, driven by non-recurring, high-impact events like the 2023 Maui wildfires.

For the 2025 TTM period, Hawaiian Electric Industries reported revenue of approximately $2.91 Billion. When you look at the margins-which show how much profit is squeezed from each dollar of revenue-the picture is stark, especially when compared to the broader utility sector.

Here's the quick math on the TTM margins, which reflect the full impact of a very challenging year:

• Gross Profit Margin: 1.78%
• Operating Profit Margin: 1.78%
• Net Profit Margin: -4.05%

A utility company's gross profit margin (gross profit as a percentage of revenue) is often low, since the cost of purchased power and fuel is a direct cost of sales, but 1.78% is defintely on the low side. Still, the operating margin (earnings before interest and taxes as a percentage of revenue) is also sitting at a very thin 1.78%, which signals minimal operational cushion before debt and taxes.

Margin Trends and Industry Comparison

The negative net profit margin of -4.05% is the most critical number here. This figure is a direct result of the massive legal and financial liabilities stemming from the 2023 wildfires. You can see the impact clearly when you look at the Q3 2025 core net income of $32.8 million (which excludes wildfire-related expenses) versus the reported net income of $30.7 million. The core business is profitable, but the extraordinary expenses are overwhelming it.

To be fair, the industry average profitability ratios for the electric power sector are much higher, which highlights the unique risk Hawaiian Electric Industries is currently managing. The TTM numbers below, updated through November 2025, show just how far the company's current performance is from its peers:

This gap shows the market is effectively pricing in the wildfire liability and higher operating costs. The Gross Margin difference is particularly striking; it suggests Hawaiian Electric Industries has a much higher cost of revenue relative to its peers, which is a structural challenge in its regulated environment.

Operational Efficiency and Cost Management

Despite the net loss, the company is showing signs of operational efficiency (OpEx) improvements in its core utility business. In Q1 2025, for example, the utility segment saw efficiency gains from improved heat rate performance and higher demand response revenues. This is a good sign for the underlying business health.

Still, cost management is a tightrope walk right now. While they are controlling core utility costs, they are also significantly increasing capital spending on wildfire mitigation. The company plans to invest $120 million in 2025 alone for wildfire safety, focusing on grid hardening and equipment upgrades. This is a necessary, non-negotiable cost that will keep operating expenses elevated for the near term, but it's crucial for long-term stability and regulatory alignment. For more on the company's long-term direction, you should review the Mission Statement, Vision, & Core Values of Hawaiian Electric Industries, Inc. (HE).

The bottom line is that the core utility business is generating a small operating profit, but the extraordinary legal and safety-related costs are pushing the total net income into the red. Your focus should be on the core earnings and the trajectory of those wildfire-related expenses.

Next step: Analyze the balance sheet to see how this negative profitability impacts liquidity and debt structure.

Debt vs. Equity Structure

You're looking at Hawaiian Electric Industries, Inc. (HE) and wondering how they are funding the business, especially given the recent volatility. The short answer is: they are heavily reliant on debt, which is typical for a capital-intensive utility, but the ratio is currently slightly above the industry average, reflecting the increased risk profile.

As of the third quarter of 2025, the company's total debt stood at approximately $2.99 Billion USD. This figure includes a significant portion of long-term debt, which was reported at $2.33 Billion at the end of the second quarter of 2025. Utilities are always capital-intensive, needing constant investment in infrastructure like power plants and grid upgrades, so they routinely use debt financing.

Here's the quick math on leverage: Hawaiian Electric Industries, Inc.'s Debt-to-Equity (D/E) ratio was approximately 1.64 as of Q3 2025. This means for every dollar of shareholder equity (the capital provided by owners), the company has $1.64 in debt. To be fair, the average D/E ratio for the US Electric Utilities industry is around 1.582, so Hawaiian Electric Industries, Inc. is operating with a bit more leverage than its peers, which is a clear signal of higher financial risk.

The company is actively managing its debt, particularly on the short-term side. For instance, Hawaiian Electric Company, Inc. (HECO) has a $50 million term loan maturing in December 2025. Plus, they maintain liquidity with access to a $250 million asset-based lending (ABL) facility, of which $220 million was undrawn as of March 31, 2025, providing a buffer. They also reported enhanced liquidity with $544 million in unrestricted cash in Q3 2025.

The financing strategy is currently dominated by managing the fallout from the 2023 Maui wildfires. The company faces a significant settlement obligation, estimated at about $1.99 billion to be paid over four years. To address this and fund capital expenditures (capex), the company has been active in the debt markets.

• Issued $500 million of 6.000% Senior Notes due 2033 in September 2025.
• The debt is considered 'high-yield' (or junk-bond) due to its sub-investment grade credit rating.
• Moody's upgraded the Corporate Family Rating to Ba3 in May 2025, and S&P upgraded the long-term issuer credit rating to 'B+' in June 2025, both with a positive outlook.

These credit rating upgrades are a direct result of the progress made on the wildfire litigation settlement, which reduces credit risk and improves the company's ability to borrow. The balance of debt and equity is a high-stakes act right now, but the recent debt issuances are crucial for funding necessary capex and managing the liability payments. You can read more about the company's long-term direction here: Mission Statement, Vision, & Core Values of Hawaiian Electric Industries, Inc. (HE).

Here is a snapshot of the key debt metrics as of late 2025:

The company is defintely leaning on debt to navigate this challenging period, but the positive credit outlook suggests the rating agencies believe the settlement plan is executable and will stabilize the balance sheet over time. The next step is to monitor the use of the proceeds from the new notes to ensure they are allocated to value-accretive capex and not just short-term liability coverage.

Liquidity and Solvency

You're looking for a clear picture of whether Hawaiian Electric Industries, Inc. (HE) can meet its near-term obligations, especially with the wildfire-related liabilities. The direct takeaway is that while the company's core liquidity ratios are tight, recent financing actions have significantly shored up its cash position, creating a critical buffer for the immediate future.

The standard measures of short-term financial health-the current ratio and quick ratio (acid-test ratio)-show a tight liquidity position. For the trailing twelve months (TTM) ended Q3 2025, Hawaiian Electric Industries' current ratio stood at 1.07, and its quick ratio was also 1.07. A ratio of 1.0 means current assets exactly cover current liabilities. Utility companies often run with lower ratios than other sectors, but this level is still a close call, indicating very little cushion if short-term obligations spike.

• Current Ratio: 1.07 (TTM Q3 2025).
• Quick Ratio: 1.07 (TTM Q3 2025).
• Tight ratios demand close cash flow monitoring.

The analysis of working capital (current assets minus current liabilities) shows a mixed trend. The Net Current Asset Value for the TTM period is a negative $5.22 billion, which is a significant structural deficit. However, the change in working capital for the TTM ended June 2025 was a positive $225 million, suggesting a recent improvement in the operational management of short-term assets and liabilities. The challenge is the sheer volume of long-term liabilities, which is what's really driving the solvency concern.

The cash flow statements reveal the company's aggressive and necessary moves to enhance its financial flexibility. The operating cash flow ratio for the TTM is a low 0.36, which means operating cash flow only covers a fraction of current liabilities-a clear sign that external financing is defintely needed. The financing cash flow trends are where the action is:

• Financing Cash Flow: Hawaiian Electric successfully issued $500 million in unsecured debt in September 2025.
• Financing Cash Flow: The company also expanded its credit facility capacity to $600 million from $375 million.
• Investing Cash Flow: Capital expenditures (CapEx) for 2025 are projected at approximately $400 million, a necessary investment for grid safety and resilience.

This debt issuance and credit facility expansion are the primary liquidity strengths, boosting unrestricted cash to $544 million at the end of Q3 2025. This cash is a vital war chest. The biggest near-term liquidity concern is the looming wildfire tort litigation settlement. The first payment of approximately $479 million is expected no earlier than the first quarter of 2026, though the company has already set aside restricted cash for this specific purpose. What this estimate hides, however, is the long-term capital requirement, with CapEx for 2026-2028 expected to be between $1.8 billion and $2.4 billion. This will require continued debt and equity funding.

The Altman Z-Score, a measure of financial distress, is a concerning 0.45, which places Hawaiian Electric Industries in the distress zone. This is a solvency red flag, but it's largely a reflection of the massive, non-core liabilities from the wildfires, not the core utility operations. For a deeper dive into the company's strategic position and valuation, check out the full post: Breaking Down Hawaiian Electric Industries, Inc. (HE) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Hawaiian Electric Industries, Inc. (HE) and wondering if the stock price reflects its true value, especially after the volatility of the past year. The short answer is that Wall Street analysts currently see it as fairly valued, giving it a consensus Hold rating as of November 2025. This isn't a strong conviction either way, but it maps the near-term risk and opportunity clearly.

The average 12-month price target from analysts is set at $11.94, which is a modest upside from the recent closing price of approximately $11.38. This suggests they don't see a massive immediate gain, but also not a catastrophic drop from current levels. You need to look beyond the price target, though, and check the core valuation multiples.

Valuation multiples tell a complex story for Hawaiian Electric Industries, Inc. due to the significant events impacting its earnings. While the Price-to-Book (P/B) ratio of 1.25 is below the utility sector average of 1.70, suggesting it might be undervalued on an asset basis, the Price-to-Earnings (P/E) ratio is highly skewed.

Here's the quick math on key valuation metrics based on fiscal 2025 data:

• Price-to-Earnings (P/E): 13.87 (Trailing Twelve Months - TTM)
• Price-to-Book (P/B): 1.25
• Enterprise Value-to-EBITDA (EV/EBITDA): 8.04

To be fair, the P/E ratio is tricky here; some trailing twelve-month calculations show a P/E as high as 144.81 due to severely depressed earnings per share (EPS). But using the more normalized P/E of 13.87, the company trades below the utility industry P/E of 18.96, which could signal a discount. Still, the EV/EBITDA of 8.04 is also lower than the industry median of 10.44, a sign the market is pricing in risk related to its debt and operations.

The stock price trend over the last 12 months, ending in November 2025, shows a positive return of about 8.28%, but this follows a massive drop from its 52-week high of $13.41. The 52-week low was $8.14, so the current price is a recovery, not a sustained upward momentum. This kind of volatility is a clear signal of ongoing uncertainty, not a stable utility stock.

Regarding income, the dividend yield is currently 0.00%, with a corresponding payout ratio of 0.00. The dividend was suspended, which is the single most important factor for many long-term utility investors. This is a crucial decision-changing piece of data. You can read more about the company's long-term goals in their Mission Statement, Vision, & Core Values of Hawaiian Electric Industries, Inc. (HE).

The analyst consensus is a pragmatic view of the current situation:

A 'Hold' means the risk-reward profile is balanced at the current price. You're defintely not getting a screaming bargain, but you're also not buying into a bubble. The next step is to monitor the regulatory and legal developments closely, as those will be the true catalysts that shift the stock out of this Hold pattern.

Risk Factors

You need to be clear-eyed about the risks facing Hawaiian Electric Industries, Inc. (HE), because they are substantial and directly impact the company's financial flexibility. The lingering shadow of the 2023 Maui wildfires, combined with regulatory and financial pressures, creates a complex risk profile. The biggest near-term risk remains the financial and operational fallout from wildfire liability, but regulatory uncertainty is a close second.

Honestly, the company's financial health is still in the distress zone; its Altman Z-Score is around 0.45, which is extremely low and flags a potential risk of financial distress. The total CapEx for 2025 is expected to be approximately $400 million, a necessary spend that still pressures cash flow.

• Wildfire Tort Liability: The total liability exposure related to the 2023 Maui wildfires has been capped at $1.99 billion, which is a massive number the company must finance.
• Regulatory Friction: The utility's trailing twelve-month Return on Equity (ROE) fell to 7.0%, significantly below the Hawaii Public Utilities Commission (HPUC)-mandated 9.5%, indicating a clear regulatory misalignment that could limit future rate increases.
• Capital Expenditure Strain: The company is projecting a massive CapEx of $1.8 billion to $2.4 billion for 2026-2028, and this high spend is subject to ongoing PUC approvals.

Operational and Financial Risks in Focus

The operational risk is tied directly to climate change and the need for grid hardening (making the grid more resilient to extreme weather). The company is spending heavily to mitigate this, but the risk of another catastrophic event is ever-present. On the financial side, while the first settlement payment of $479 million is secured in restricted cash and expected in early 2026, subsequent payments will be funded with new debt, which will keep pressure on the balance sheet.

Here's the quick math: The company's core net income for Q3 2025 was only $32.8 million. A single, large, unrecoverable expense can wipe out multiple quarters of earnings, and that's the reality of a regulated utility operating in a high-risk environment. Also, keep an eye on the planned monetization of a 9.9% stake in American Savings Bank, as market volatility could affect the value of that sale. If you want a deeper dive into who is betting on this recovery, you should read Exploring Hawaiian Electric Industries, Inc. (HE) Investor Profile: Who's Buying and Why?

Concrete Actions and Mitigation

The company is defintely not sitting still. Management has taken clear, decisive actions to improve the operational and financial risk profile. They successfully reduced holding company debt by $384 million in April 2025 following the sale of non-core assets. Operationally, the Wildfire Safety Strategy is the core defense. They are investing in technology, like deploying all weather stations and AI-assisted high-definition video cameras ahead of schedule, which strengthens the utility's operational risk profile. The key risk now shifts to execution: can they deploy the planned $400 million in 2025 CapEx efficiently and secure the necessary regulatory approvals to ensure cost recovery?

Growth Opportunities

You want to know where the money will be made at Hawaiian Electric Industries, Inc. (HE), and the answer is simple: growth is now a function of massive, regulated capital investment in safety and the state's aggressive clean energy mandate. The company is pivoting hard, selling non-core assets to fund a multi-year grid overhaul that is defintely the key to future revenue.

Capital Investment as the Primary Driver

For a regulated utility like Hawaiian Electric Industries, Inc., the primary growth mechanism is capital expenditure (CapEx), which is then recovered through the rate base. This is a clear, if slow, path to earnings. The company is projecting a significant ramp-up in spending, moving from an expected CapEx of approximately $400 million in the 2025 fiscal year to a projected 2026-2028 total of $1.8 billion to $2.4 billion.

This investment isn't just for maintenance; it's a strategic move focusing on grid resilience and wildfire mitigation, which is now a crucial, high-priority growth area. The spending is broken down into specific categories that directly impact future earnings via regulatory mechanisms like the Annual Revenue Adjustment Mechanism (ARA) and the Energy Performance-Based Regulation Mechanism (EPRM).

• Wildfire and Resilience CapEx: Expected to be approximately $50 million to $100 million in 2026, financed via securitization.
• ARA-Recovered CapEx: Expected to be $350 million to $400 million in 2026.
• EPRM-Recovered CapEx: Expected to add roughly $150 million to $200 million in 2026.

The Renewable Energy Mandate and Innovation

Hawaii's mandate for 100% clean energy by 2045 is Hawaiian Electric Industries, Inc.'s most significant long-term growth driver, effectively creating a guaranteed market for renewable infrastructure investment. The company has already surpassed its near-term goals, hitting a Renewable Portfolio Standard (RPS) of 36% as of September 2025, which is already ahead of its 2030 target.

This progress is driven by concrete project completions, which are the real product innovations for a utility. For instance, the Hoohana Solar 1 project on O'ahu became commercially operational in July 2025, adding 52 MW of solar capacity and 208 MWh of battery storage. This focus on grid modernization and integrating storage is a competitive advantage, as it addresses the unique challenge of island grids and intermittent power. You can see the foundation of this strategy in their Mission Statement, Vision, & Core Values of Hawaiian Electric Industries, Inc. (HE).

Financial Projections and Strategic Simplification

Analysts are factoring the high CapEx and regulatory framework into their models, projecting long-term annual revenue growth of 4.8% and earnings growth of 9.5%. The company's Q3 2025 consolidated core net income was $32.8 million, or $0.19 per share, demonstrating resilience despite ongoing litigation costs.

To fund this growth and manage debt, Hawaiian Electric Industries, Inc. is simplifying its structure. In September 2025, the utility completed a successful $500 million unsecured debt offering. They are also considering monetizing a 9.9% stake in American Savings Bank in the near term, which would provide another injection of capital for the utility's core mission. This is a clear move to focus all resources on the utility business.

Here's the quick math on the 2025 quarterly revenue performance:

What this estimate hides is the regulatory risk: the CapEx projections and future earnings are still subject to approval from the Public Utilities Commission (PUC) for key projects like the Wai'a Repowering Project and the wildfire safety strategy. The company is also seeking an alternative rate rebasing process, with a proposal due to the PUC by January 7, 2026, which is crucial for setting target revenues ahead of the next performance-based regulation (PBR) period starting in 2027.