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Pinnacle West (PNW) Up 1.1% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Pinnacle West (PNW). Shares have added about 1.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Pinnacle West due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Pinnacle West's Earnings & Revenues Down Y/Y in Q2

Pinnacle West Capital adjusted earnings of $1.28 per share in the second quarter of 2019 missed the Zacks Consensus Estimate of $1.43  by 10.5%. In the year-ago quarter, the company had reported adjusted earnings of $1.48. Unfavorable weather adversely impacted earnings in the second quarter.

Total Revenues

Total revenues came in at $869.5 million, which declined 10.7% on a year-over-year basis.

Operational Highlights

In second-quarter 2019, total operating expenses of $672.9 million fell 8% from $731.9 in the year-ago quarter.

Operating income fell 18.8% year over year to $196.6 million.

Interest expenses declined 5.3% to $57.5 million from $60.7 million in the year-ago quarter.

Courtesy of the improving Arizona economy, customer volumes improved 1.8% year over year in the quarter under review.

Financial Highlights

Pinnacle West had cash and cash equivalents of $1.6 million as of Jun 30, 2019 compared with $5.8 million as of Dec 31, 2018.

Net cash provided by continuing operations activities in the first six months of 2019 was $345.9 million, lower than $395.8 million in the first six months of 2018.

Guidance

The company expects 2019 consolidated earnings to be at the lower end of the range of $4.75-$4.95. The mid-point of $4.85 is higher than the current Zacks Consensus Estimate of $4.80.



 

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

At this time, Pinnacle West has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Pinnacle West has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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