Pinnacle West Capital Corporation (PNW) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Pinnacle West (PNW)? Shares have been on the move with the stock up 8.4% over the past month. The stock hit a new 52-week high of $80.6 in the previous session. Pinnacle West has gained 12.6% since the start of the year compared to the -0.7% move for the Zacks Utilities sector and the 0.5% return for the Zacks Utility - Electric Power industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 3, 2022, Pinnacle West reported EPS of $2.88 versus consensus estimate of $2.62.
For the current fiscal year, Pinnacle West is expected to post earnings of $4.09 per share on $4.02 billion in revenues. This represents a -25.23% change in EPS on a 5.74% change in revenues. For the next fiscal year, the company is expected to earn $4.22 per share on $4.24 billion in revenues. This represents a year-over-year change of 3.18% and 5.4%, respectively.
Valuation Metrics
Pinnacle West may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Pinnacle West has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 19.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.7X. On a trailing cash flow basis, the stock currently trades at 6.5X versus its peer group's average of 8.5X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Pinnacle West currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Pinnacle West meets the list of requirements. Thus, it seems as though Pinnacle West shares could have potential in the weeks and months to come.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
