What Hawaiian Electric Industries Bears Saw Before The Fall

Hawaiian Electric Industries has just locked in a US$4b Maui wildfire settlement and started writing the first of four large annual checks, while Q2 2026 results show higher revenue and a much fatter net margin than a year earlier. Investors who held Hawaiian Electric Industries from the start of the year are down 32.8%, including dividends. If you had put money to work on 1 January, how should this mix of legal overhang, grid projects, and cleaner earnings shape your expectations from here?

The move put Hawaiian Electric Industries in the middle of this trade. Scan 41 power grid technology and infrastructure stocks for other companies exposed to it.

The Two Hawaiian Electric Industries Stories Investors Were Weighing

The shares cost US$12.3 at the start, and anyone looking at Hawaiian Electric Industries then had to pick between two very different futures for the grid and the balance sheet.

On the optimistic side, the bull story argued that divesting non core assets and faster grid modernization could support a Fair Value of US$14. This price was implied by that view, built on assumptions of 8.6% revenue growth and profit margins shifting from a loss to 2.7%.

The more cautious bear narrative still saw supportive Hawaii legislation and grid upgrades. However, it treated wildfire liabilities and higher debt as central risks and pointed to a Fair Value of US$10.75 based on 6.2% revenue growth and a 2.6% margin assumption.

What The Results Changed For The Hawaiian Electric Industries Thesis

Settling the US$4b Maui wildfire litigation and starting the payment schedule gave Hawaiian Electric Industries clearer visibility on its largest liability, which leaned toward the cautious case that focused on balance sheet pressure. At the same time, Q2 2026 revenue of US$939.7m and net income of US$123.2m, with net margin at 13.1% versus 3.5% a year earlier, supported the optimistic profitability story. Taken together, the evidence cut both ways.

The key assumption investors can carry elsewhere is how quickly big one off risks convert into defined obligations that earnings can be measured against. For any utility facing litigation or heavy project spend, it may help to track the timing and size of settlements or approvals alongside shifts in reported margin and planned rate resets.

What Hawaiian Electric Industries' Lower Price Is Asking You To Believe

Hawaiian Electric Industries now trades at US$8.49, after a loss of 32.8% from the start of the year. The selected Narrative still places its Fair Value above that level, reflecting a view that wildfire risk management and grid spending could support a fuller earnings multiple over time.

That argument leans on securitization, rate resets, and renewable projects working together. A buyer today would need to assess whether wildfire mitigation and grid investments can be converted into stable, regulator-supported returns that justify a higher earnings multiple.

"Divesting non-core assets and rapid grid modernization improve focus, enabling HEI to accelerate regulated rate base growth and core revenue expansion. Strategic smart grid investments and climate incentives enhance profitability, grid resiliency, and open new revenue streams amid Hawaii's unique clean energy landscape."

That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for

Go Straight To The Source

This company's disappointment is already part of the story. Your next idea could come from looking where the price and the possibilities still seem far apart. Here are three companies priced below our estimates.

• Company 1 - 25% below our estimate - sells injectable treatments for weight loss and diabetes that patients struggle to access elsewhere.
• Company 2 - 50% below our estimate - builds a payments, marketplace and banking super-app that absorbs more everyday consumer transactions.
• Company 3 - 49% below our estimate - expands a tech-driven small business bank while scaling digital lending and deposit platforms.

Those are three of them. See every one of the 33 undervalued companies on it →

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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