It's been a good week for Pinnacle West Capital Corporation (NYSE:PNW) shareholders, because the company has just released its latest full-year results, and the shares gained 3.2% to US$104. Revenues came in 4.2% below expectations, at US$3.5b. Statutory earnings per share were relatively better off, with a per-share profit of US$4.77 being roughly in line with analyst estimates. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
After the latest results, the eight analysts covering Pinnacle West Capital are now predicting revenues of US$3.73b in 2020. If met, this would reflect a credible 7.5% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$4.87, roughly flat on the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.67b and earnings per share (EPS) of US$4.86 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$98.53. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Pinnacle West Capital at US$110 per share, while the most bearish prices it at US$90.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Pinnacle West Capital's past performance and to peers in the same market. Analysts are definitely expecting Pinnacle West Capital's growth to accelerate, with the forecast 7.5% growth ranking favourably alongside historical growth of 1.0% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 3.2% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Pinnacle West Capital is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$98.53, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Pinnacle West Capital analysts - going out to 2023, and you can see them free on our platform here.
You can also see whether Pinnacle West Capital is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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