First Hawaiian Stock Rises Despite Earnings Decline

Investors seem more bullish on First Hawaiian (NASDAQ:FHB) this week, as the stock climbs 4.3% despite earnings trending downwards over the past year. This apparent contradiction begs the question: what factors are driving investor optimism, and should we expect this trend to continue?

Firstly, let's examine the earnings data. FHB reported earnings per share (EPS) of $0.48 for the quarter ended September 2024, which, although lower than the year-ago quarter's $0.46, still managed to beat the Zacks Consensus Estimate by 9.09%. This positive earnings surprise indicates that the company's performance was better than expected, which can boost investor confidence.

Moreover, FHB's revenue growth has been strong, with the company reporting revenue of $210 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.52%. This revenue growth, despite the earnings decline, suggests that the company's top-line performance is robust.

However, the most intriguing aspect of FHB's recent performance is the improvement in its Relative Strength (RS) Rating. The RS Rating is a measure of a stock's price performance relative to other stocks in the market. FHB's RS Rating has been climbing into higher percentiles on multiple occasions, indicating that the stock's price performance has been stronger compared to other stocks in the market.

Another factor contributing to investor optimism is FHB's dividend yield. The company offers a dividend yield of 3.99%, which is attractive for income-oriented investors. Additionally, FHB has been increasing its dividends for 8 consecutive years, providing a steady income stream.

Analysts' price targets and consensus ratings also play a role in driving investor sentiment. The average price target for FHB is $26.38, which is 1.11% higher than the current price. This suggests that analysts expect the stock to appreciate in the future, which could attract investors and drive up the stock price. However, the consensus rating is "Sell," which might deter some investors from buying the stock.

In conclusion, while FHB's earnings have been trending downwards over the past year, the company's strong revenue growth, improved Relative Strength Rating, attractive dividend yield, and analysts' price targets have contributed to investor optimism. However, the "Sell" consensus rating suggests that some analysts remain cautious about the stock's prospects. As an investor, it's essential to monitor the company's performance closely and consider other factors, such as the company's fundamentals and recent performance, before making investment decisions.