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Pinnacle West Gains on Investments, Sets Clean Energy Goals

Zacks Equity Research
·3 min read

Pinnacle West Capital Corporation’s PNW focus on expanding its renewable capacity coupled with its systematic investments positions it well to benefit from the new commercial ventures in its service territories. Also, the company’s efforts to minimize expenses amid the ongoing pandemic will aid its earnings.

The Zacks Consensus Estimate for 2020 earnings is pegged at $4.82 per share, indicating growth of 1.05% from the year-ago reported figure. Also, the Zacks Consensus Estimate for 2020 revenues stands at $3.52 billion, suggesting 1.48% growth from the prior-year reported number. Additionally, long-term (three-five years) earnings growth of the company is pegged at 4.70%.

In the past three months, shares of the company have gained 4.1%, outperforming the industry’s rise of 1.6%.

What’s Driving the Stock?

Pinnacle West’s investments in clean power generation, and transmission & distribution lines will help it expand its customer base with more responsibility and better efficiency. The company projects capital expenditures of $1,331 million, $1,650 million and $1,725 million for 2020, 2021 and 2022, respectively. Improving economic conditions in its service territories are also driving demand.

Moreover, through the implementation of new policies, the utility is reducing its Operations and Maintenance expenses as well as enhancing its customer benefit and shareholder value.

Apart from growing its utility infrastructure, Pinnacle West continues to focus on increasing its renewable strength. Under the Integrated Resource Plan, the company expects to add 2,894 MW of clean energy toits portfolio. Also, it announced its objectiveto deliver 100% clean carbon-free electricity to customers by 2050.

Headwinds

However, its progress could be hindered by fluctuations in commodity prices, stringent environmental regulations and unplanned outages in nuclear generation facilities.

Zacks Rank & Key Picks

The company currently has a Zacks Rank #3 (Hold). A few better-ranked electric utilities are Portland General Electric Company POR, Entergy Corporation ETR and Hawaiian Electric Industries, Inc. HE, all carrying a Zacks Rank#2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Portland General Electric Company delivered an earnings surprise of 7.74%, on average, in the last four quarters. The company has a long-term earnings growth rate of 5.14%.

Entergy Corporation delivered an earnings surprise of 11.20%, on average, in the last four quarters. The company has a long-term earnings growth rate of 5.77%.

Hawaiian Electric Industries has a long-term earnings growth rate of 1.67%. The Zacks Consensus Estimate for current-year earnings has moved 1.2% north in the past 60 days.

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Entergy Corporation (ETR) : Free Stock Analysis Report
 
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Portland General Electric Company (POR) : Free Stock Analysis Report
 
Hawaiian Electric Industries, Inc. (HE) : Free Stock Analysis Report
 
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