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Hawaiian Airlines’ stock soared in 2016 amid low fuel prices and a strong demand for island vacations.
The state’s banks saw shares rally on an improving Hawaii economy and the potential impact of Donald Trump’s presidency.
All told, 2016 was a robust year for local stocks as eight of the 13 publicly traded companies with a market capitalization of at least $10 million posted gains.
Shares of Hawaiian Holdings Inc., the parent company of Hawaiian Airlines, soared 61.3 percent during the year to outperform all Hawaii-based companies.
Hawaiian ended the year at $56.15. That’s a 18,617 percent gain from June 12, 2003, when the company was in Chapter 11 bankruptcy and trading at just 30 cents. A $10,000 investment at that price would be worth just under $1.9 million today.
“Hawaiian Airlines was the No. 1 performing airline equity in (the U.S. in) 2016,” airline industry expert John Reardon of Pasadena, Calif.-based Western International Securities Inc. said in an email. “It accomplished that feat by exceeding earnings expectations due to strong Hawaiian vacation demand, good management and lower than industry standard costs.”
Reardon cautioned that Hawaiian’s expenses, as measured by its cost per available seat mile, could rise markedly this year if the company signs a new pilots’ contract that could add another $50 million to the cost line, and a flight attendants’ contract that will be up for renegotiation.
“I think it will be hard for them to keep up the stellar stock performance in 2017, although the graveyard is full of people who have underestimated Hawaiian Airlines,” Reardon said.
While Hawaiian’s shares were soaring, local bank stocks were getting a lift over possible favorable regulatory treatment that U.S. banks might receive under the Trump administration.
Timing was good for those who bought shares in First Hawaiian Inc., holding company for First Hawaiian Bank, soon after its August initial public offering. The state’s largest bank priced its shares at $23 Aug. 3, and its share rose 51.4 percent to finish the year at $34.66.
Central Pacific Financial Corp., the state’s fourth-largest bank, saw its shares jump 42.7 percent to close the year at $31.17.
Bank of Hawaii Corp. was close behind as shares of the second-largest bank increased 41 percent to finish the year at $88.69.
Territorial Bancorp Inc., parent of the state’s fifth-largest bank, saw its stock rise 18.4 percent to $32.59.
Three key factors contributed to the strength this year in Hawaii bank stocks, according to analyst Aaron Deer of San Francisco-based investment bank Sandler O’Neill.
“The Hawaii economy remained robust with record tourism, very low unemployment and healthy building and real estate activity,” he said in an email. “The IPO of First Hawaiian drew increased investor attention to the Hawaii banks and the favorable environment in which they operate. And the election of Donald Trump has the promise of increasing interest rates, lowering corporate taxes and reducing regulation — all of which would be positive for bank profitability. “
Hawaiian Electric Industries Inc., whose $4.3 billion sale to Florida-based NextEra Energy Inc. was rejected by the state Public Utilities Commission in June, saw its shares rise 14.2 percent during the year to $32.88. HEI also owns American Savings Bank, the third-largest bank in the state. HEI’s shares had a total return of 19 percent on the strength of its 3.77 percent dividend yield, which is the highest of any local stock.
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