PNW Stock Overview
Pinnacle West Capital Corporation, through its subsidiary, Arizona Public Service Company, provides retail and wholesale electric services primarily in the state of Arizona.
Pinnacle West Capital Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$64.51|
|52 Week High||US$80.51|
|52 Week Low||US$62.78|
|1 Month Change||-13.87%|
|3 Month Change||-13.62%|
|1 Year Change||-10.55%|
|3 Year Change||-33.65%|
|5 Year Change||-24.40%|
|Change since IPO||460.96%|
Recent News & Updates
Pinnacle West - From Cheap To Overvalued Again
When I last covered the AZ-based utility Pinnacle West, I went with a "HOLD" due to what I viewed as an overvalued price. Since then, we've seen a massive dip, as well as a relatively quick recovery to very similar levels to my last article. This just goes to show you - you invest cheaply and enjoy excellent RoR when the company reverts. Dear Readers, When I last wrote about Pinnacle West Capital Corporation (PNW), I viewed the company as overvalued. This was due to overall muted earnings by the company. I still own a solid stake in the company - and it continues to go up and down here, with my current stake at about 2% TPV. We've been through why the company is currently trading down. It's all about the rate case changes and corresponding decline that we've seen - though we've also seen a fair bit of recovery since then. Since my last article, the company has basically done a +/- 0% - or very close to it. Seeking Alpha PNW Article (Seeking Alpha PNW Article) Let's look at where things are today. Pinnacle West - an Update So, as I said in my last article - the fundamentals of pinnacle west haven't really changed insofar as the company goes. What has changed are the prospects for the rate case. However, despite these issues, the company's operating geography remains one of the fastest-growing states in the nation, which translates into very strong consumer trends and a continued EPS growth target of 5-7% because of a 1.5-2.5% retail customer growth per year - despite the negative rate case. The company also remains at BBB+ - the recent rate issues haven't changed that. And even if all of the expected rate headwinds materialize, the company's payout ratio and 4.2+% yield at the current price, remain as safe as clear spring water, based on the company's forecasted 2022-2024E EPS. I do not consider it likely in any way, that the company will be facing any issues that warrant a dividend cut. My M.O remains to buy this company at a very cheap valuation - which is why I bought some shares when the company dropped well below $70/share not that long ago. That also means though, that the case today isn't necessarily as positive as we've seen in the past. The rate case issues, as I wrote in my last piece, actually simplify the thesis for PNW. Why? Because it really does cap the potential upside, we can get from this investment for the coming few years. The combination of the company-forecasted required capital investments, combined with PNW's clear statement that it won't be tapping equity as a funding source until the end of the next (not this recent) rate case, means that the business needs to fund these costs from operational cash flow and debt either from holding or PNW itself. The latest results we have are the 2Q22. For this quarter, we're really starting to see some of the impacts from the rate case - but despite this, the company isn't really trading down. The EPS is down to $1.45/share, impacted in part by a base rate impact of around a quarter of a dollar or so. Guidance for the year remains at $3.9-$4.1, which more than covers the company dividend, and the EPS growth guidance is very much intact. PNW IR (PNW IR) Meanwhile, the company's current capital deployment plan guides for around $1.5B per year, or $4.7B until 2024E. This is a mix of clean generation, transmission investments, distribution investments (above all), and other investments. This is crucial both in order to harden the distribution infrastructure as well as support Arizona's population growth. The latest rate case was a bit of a horror show. The company hopes that the next few rate cases will have a more positive outcome for the company, allowing for a higher RoE. PNW IR (PNW IR) One of the main worries investors may have until the next rate case is whether the company is going to dilute current shareholders given the investment plans. The company is assuaging fears here and is clear in the communication that there are no plans to issue any equity whatsoever. Instead, investments will be funded with operational cash flow, APS debt, PNW debt, and equity alternatives, fulfilling the $4.7B in capital requirements. The rate case also hasn't impacted the maturity schedule. No significant maturities for the next 2-3 years, with most of the debt after 2028. This company isn't in any fundamental danger and remains a safe sort of utility investment. Pinnacle West is a good example of why utilities are indeed stable investments that warrant your money if you're looking for conservative cash flows. Despite the heavy impact of the rate case, PNW has recovered nicely. PNW's plan to support its growth, reliability and ESG transition is on track. A few planned outages will impact the company during 2022. Arizona and PNW usually face only marginal impacts from weather effects, and this was true for 1Q22, which saw only a $1M variance from normal in quarterly impact. I want forecastability from my utilities, and PNW, despite everything, gives me just that. So, with little changes in the fundamentals, and the valuation going up and down, let's see how the company's forecast has changed. Pinnacle West Valuation The issue with PNW's valuation is, unsurprisingly, the impact from the rate case. The current forecast calls for a mid-point sort of EPS forecast of $4/share, which is a 26% YoY EPS decline. This means that we really want to make sure we buy this company cheap. This is no longer the case at a price of $77.3/share. That'd be a good price, or a decent one, if the company had received a favorable outcome, which the company did not. Beyond 2022, the current forecasts go in-line with the company's own expectations, making that an EPS growth per year of 5-7% or so. What this strictly means is, even at a premium upside of 18x P/E, the upside is no higher than 7.5% per year - at most. I wouldn't go any higher than this. At trough valuation less than 2 months ago, that upside was above 12% per year, which is much more digestible to me. At this valuation...not so much. PNW Upside (F.A.S.T Graphs) In terms of the rate case specifics, 2022 is expected to be the heaviest impact of all. The current forecast lies at the midpoint of the company's own guidance, with 15 analysts forecasting a $4/share average. Not exactly a positive YoY development. So you can see why there are now reasons to be far less excited for the company's prospects. Because what makes utilities such great investments is working clearly against PNW - the forecastability of its earnings and cash flows. I'm at a fairly high degree of certainty that PNW's earnings won't be materially better than what's being forecasted here. I love investing in utilities - but my current focus based on valuation isn't PNW, but Finnish Fortum (OTCPK:FOJCF). Still, 2 months ago, my utility of choice was PNW. It's all about buying these companies at the right valuation - namely, a cheap valuation. However, some of the advantages of a utility remain here. Take forecast accuracy for one. Historical forecast accuracy with a 10% MoE is 100%. 100%. The company doesn't beat forecasts, it doesn't fail them, they're very clear in what happens. Other utilities are very similar. Yields and dividends are typically very stable.
Is Pinnacle West Capital (NYSE:PNW) Using Too Much Debt?
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that...
Pinnacle West Capital Q2 2022 Earnings Preview
Pinnacle West Capital (NYSE:PNW) is scheduled to announce Q2 earnings results on Wednesday, August 3rd, before market open. The consensus EPS Estimate is $1.31 (-31.4% Y/Y) and the consensus Revenue Estimate is $974.6M (-2.5% Y/Y). Over the last 1 year, PNW has beaten EPS estimates 75% of the time and has beaten revenue estimates 100% of the time. Over the last 3 months, EPS estimates have seen 1 upward revision and 5 downward. Revenue estimates have seen 3 upward revisions and 0 downward.
Pinnacle West Capital (NYSE:PNW) Is Reinvesting At Lower Rates Of Return
If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an...
|PNW||US Electric Utilities||US Market|
Return vs Industry: PNW underperformed the US Electric Utilities industry which returned -1.3% over the past year.
Return vs Market: PNW exceeded the US Market which returned -23.2% over the past year.
|PNW Average Weekly Movement||3.1%|
|Electric Utilities Industry Average Movement||3.2%|
|Market Average Movement||6.8%|
|10% most volatile stocks in US Market||15.5%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: PNW is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.
Volatility Over Time: PNW's weekly volatility (3%) has been stable over the past year.
About the Company
Pinnacle West Capital Corporation, through its subsidiary, Arizona Public Service Company, provides retail and wholesale electric services primarily in the state of Arizona. The company engages in the generation, transmission, and distribution of electricity using coal, nuclear, gas, oil, and solar generating facilities. Its transmission facilities include approximately 5,814 pole miles of overhead lines and approximately 74 miles of underground lines; and distribution facilities comprise approximately 11,258 miles of overhead lines and approximately 22,821 miles of underground primary cable, as well as owns and maintains 475 transmission and distribution substations.
Pinnacle West Capital Fundamentals Summary
|PNW fundamental statistics|
Is PNW overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|PNW income statement (TTM)|
|Cost of Revenue||US$2.26b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||4.85|
|Net Profit Margin||13.88%|
How did PNW perform over the long term?See historical performance and comparison
5.3%Current Dividend Yield
Is PNW undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 5/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for PNW?
Other financial metrics that can be useful for relative valuation.
|What is PNW's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does PNW's PE Ratio compare to its peers?
|PNW PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
OGE OGE Energy
LNT Alliant Energy
PNW Pinnacle West Capital
Price-To-Earnings vs Peers: PNW is good value based on its Price-To-Earnings Ratio (13.3x) compared to the peer average (16.1x).
Price to Earnings Ratio vs Industry
How does PNW's PE Ratio compare vs other companies in the US Electric Utilities Industry?
Price-To-Earnings vs Industry: PNW is good value based on its Price-To-Earnings Ratio (13.3x) compared to the US Electric Utilities industry average (17.8x)
Price to Earnings Ratio vs Fair Ratio
What is PNW's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||13.3x|
|Fair PE Ratio||21.2x|
Price-To-Earnings vs Fair Ratio: PNW is good value based on its Price-To-Earnings Ratio (13.3x) compared to the estimated Fair Price-To-Earnings Ratio (21.2x).
Share Price vs Fair Value
What is the Fair Price of PNW when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: PNW ($64.51) is trading below our estimate of fair value ($260.3)
Significantly Below Fair Value: PNW is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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How is Pinnacle West Capital forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?
Future Growth Score1/6
Future Growth Score 1/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: PNW's forecast earnings growth (5.5% per year) is above the savings rate (1.9%).
Earnings vs Market: PNW's earnings (5.5% per year) are forecast to grow slower than the US market (14.8% per year).
High Growth Earnings: PNW's earnings are forecast to grow, but not significantly.
Revenue vs Market: PNW's revenue (3.8% per year) is forecast to grow slower than the US market (7.7% per year).
High Growth Revenue: PNW's revenue (3.8% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: PNW's Return on Equity is forecast to be low in 3 years time (8.4%).
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How has Pinnacle West Capital performed over the past 5 years?
Past Performance Score2/6
Past Performance Score 2/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: PNW has high quality earnings.
Growing Profit Margin: PNW's current net profit margins (13.9%) are lower than last year (15.7%).
Past Earnings Growth Analysis
Earnings Trend: PNW's earnings have grown by 4.4% per year over the past 5 years.
Accelerating Growth: PNW's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: PNW had negative earnings growth (-5.1%) over the past year, making it difficult to compare to the Electric Utilities industry average (10.1%).
Return on Equity
High ROE: PNW's Return on Equity (9.4%) is considered low.
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How is Pinnacle West Capital's financial position?
Financial Health Score1/6
Financial Health Score 1/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: PNW's short term assets ($1.8B) do not cover its short term liabilities ($2.0B).
Long Term Liabilities: PNW's short term assets ($1.8B) do not cover its long term liabilities ($14.5B).
Debt to Equity History and Analysis
Debt Level: PNW's net debt to equity ratio (128.8%) is considered high.
Reducing Debt: PNW's debt to equity ratio has increased from 97.8% to 129.2% over the past 5 years.
Debt Coverage: PNW's debt is not well covered by operating cash flow (14.6%).
Interest Coverage: PNW's interest payments on its debt are well covered by EBIT (3.4x coverage).
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What is Pinnacle West Capital current dividend yield, its reliability and sustainability?
Dividend Score 5/6
Cash Flow Coverage
Current Dividend Yield
Dividend Yield vs Market
|Pinnacle West Capital Dividend Yield vs Market|
|Company (Pinnacle West Capital)||5.3%|
|Market Bottom 25% (US)||1.7%|
|Market Top 25% (US)||4.7%|
|Industry Average (Electric Utilities)||3.3%|
|Analyst forecast in 3 Years (Pinnacle West Capital)||5.5%|
Notable Dividend: PNW's dividend (5.27%) is higher than the bottom 25% of dividend payers in the US market (1.67%).
High Dividend: PNW's dividend (5.27%) is in the top 25% of dividend payers in the US market (4.73%)
Stability and Growth of Payments
Stable Dividend: PNW's dividends per share have been stable in the past 10 years.
Growing Dividend: PNW's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonable payout ratio (69.6%), PNW's dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: PNW is paying a dividend but the company has no free cash flows.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Jeff Guldner (56 yo)
Mr. Jeffrey B. Guldner, also known as Jeff, has been Chairman and Chief Executive Officer of Arizona Public Service Company since November 15, 2019 and served as its President since August 13, 2021 until M...
CEO Compensation Analysis
|Jeff Guldner's Compensation vs Pinnacle West Capital Earnings|
|Date||Total Comp.||Salary||Company Earnings|
|Jun 30 2022||n/a||n/a|
|Mar 31 2022||n/a||n/a|
|Dec 31 2021||US$8m||US$1m|
|Sep 30 2021||n/a||n/a|
|Jun 30 2021||n/a||n/a|
|Mar 31 2021||n/a||n/a|
|Dec 31 2020||US$7m||US$1m|
|Sep 30 2020||n/a||n/a|
|Jun 30 2020||n/a||n/a|
|Mar 31 2020||n/a||n/a|
|Dec 31 2019||US$4m||US$778k|
|Sep 30 2019||n/a||n/a|
|Jun 30 2019||n/a||n/a|
|Mar 31 2019||n/a||n/a|
|Dec 31 2018||US$2m||US$575k|
Compensation vs Market: Jeff's total compensation ($USD8.10M) is about average for companies of similar size in the US market ($USD8.66M).
Compensation vs Earnings: Jeff's compensation has been consistent with company performance over the past year.
Experienced Management: PNW's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.
Experienced Board: PNW's board of directors are considered experienced (6 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
|17 May 22||SellUS$259,058||Barbara Lockwood||Individual||3,489||US$74.25|
|09 Nov 21||SellUS$212,130||James Hatfield||Individual||3,327||US$63.76|
|Owner Type||Number of Shares||Ownership Percentage|
|State or Government||47,753||0.04%|
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Pinnacle West Capital Corporation's employee growth, exchange listings and data sources
- Name: Pinnacle West Capital Corporation
- Ticker: PNW
- Exchange: NYSE
- Founded: 1985
- Industry: Electric Utilities
- Sector: Utilities
- Implied Market Cap: US$7.292b
- Shares outstanding: 113.04m
- Website: https://www.pinnaclewest.com
Number of Employees
- Pinnacle West Capital Corporation
- 400 North Fifth Street
- PO Box 53999
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|PNW||NYSE (New York Stock Exchange)||Yes||Common Stock||US||USD||Jan 1968|
|PWC||DB (Deutsche Boerse AG)||Yes||Common Stock||DE||EUR||Jan 1968|
|PWC||XTRA (XETRA Trading Platform)||Yes||Common Stock||DE||EUR||Jan 1968|
|0KIT||LSE (London Stock Exchange)||Yes||Common Stock||GB||USD||Jan 1968|
|P1NW34||BOVESPA (Bolsa de Valores de Sao Paulo)||BDR EACH 2 REPR 1 COM||BR||BRL||Jan 2020|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/10/02 00:00|
|End of Day Share Price||2022/09/30 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.