Phoenix, Arizona-based Pinnacle West Capital Corporation (PNW) is an energy company primarily focused on providing reliable and sustainable electricity. With a market cap of $10.6 billion, PNW operates through its principal subsidiary, Arizona Public Service (APS), delivering energy solutions to over 1.3 million customers across Arizona.
Shares of this leading energy company have gained 26.2% over the past 52 weeks, underperforming the broader S&P 500 Index ($SPX), which rallied nearly 31%. However, in 2024, PNW is up 29.4% on a YTD basis, exceeding the SPX's 25.2% gain.
Narrowing the focus, PNW is underperforming the Utilities Select Sector SPDR Fund's (XLU) 30.3% gains over the past 52 weeks.
Pinnacle West Capital has underperformed relative to the broader market and peers, reflecting concerns over regulatory risks and potential energy policy shifts. However, on Nov. 6, PNW shares gained 3.9% following a stronger-than-expected Q3 earnings report. The company posted EPS of $3.37, slightly above the consensus estimate of $3.35, though down 3.7% year-over-year.
Revenue of $1.77 billion also exceeded expectations of $1.68 billion, demonstrating resilience amid challenging conditions. Additionally, the company raised its 2024 earnings guidance to $5.00 to $5.20 per share, driven by favorable weather, customer growth, and sales momentum, partially offset by higher operating expenses.
For the current fiscal year, ending in December, analysts expect PNW’s EPS to grow 13.4% to $5 on a diluted basis. The company's earnings surprise history is promising. It beat the consensus estimate in the last four quarters.
Among the 14 analysts covering PNW stock, the consensus rating is a “Moderate Buy.” That’s based on six “Strong Buy” ratings and eight “Holds.”
This configuration is less bullish than a month ago, with seven analysts suggesting a “Strong Buy.”
On Nov. 22, Morgan Stanley's (MS) David Arcaro lowered Pinnacle West's price target to $81 from $82, citing underperformance in utilities and concerns over California's regulatory and political risks.
The mean price target is $92.92, which indicates that the stock trades at a premium. The Street-high price target of $105 suggests an upside potential of 13%.
