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Pinnacle West (PNW) Q4 Earnings Miss, Revenues Increase Y/Y

Zacks Equity Research

Pinnacle West Capital PNW reported adjusted earnings per share of 47 cents in the fourth quarter of 2016. The bottom line lagged the Zacks Consensus Estimate of 49 cents by 4.1% but increased 21.3 % year over year.

Full-year 2016 earnings of $3.95 per share were 0.5% lower than the Zacks Consensus Estimate of $3.97. However, earnings exceeded the 2015 figure by 0.8%. The full-year earnings were within the projected earnings range of $3.90–$4.10 per share.

The year-over-year increase in earnings were driven by lower interest expenses, improved income from the company’s AZ Sun program and higher retail electricity earnings as the customer base expanded 1.4% year over year.

Total Revenue

In the quarter under review, total revenue of $739.2 million surpassed the year-ago figure of $734.4 million by 0.6%.

Revenues were $3.5 billion in 2016, up 0.3% year over year. The company continues to benefit from the improving economic conditions in Arizona.

Pinnacle West Capital Corporation Price, Consensus and EPS Surprise

 

Pinnacle West Capital Corporation Price, Consensus and EPS Surprise | Pinnacle West Capital Corporation Quote

Operational Highlights

Strong performance by Pinnacle West Capital’s Palo Verde Nuclear Generating Station boosted the overall results of the company. This nuclear plant produced 32.3 million megawatt-hours of carbon-free electricity in 2016.

Total operating expense in fourth-quarter 2016 decreased 1.3% to $616.4 million, primarily due to lower operation and maintenance expenses.

In the reported quarter, operating income increased 11.8% year over year to $122.9 million.

Interest expenses were up 3.9% to $50.8 million from $48.9 million a year ago.

Financial Update

Long-term debt was $4,021.8 million as of Dec 31, 2016 as against $3,462.4 million as of Dec 31, 2015.

Cash from operating activities in 2016 was $1,023 million compared with $1,094 million in the prior-year period.

Guidance

Pinnacle West Capital expects its retail energy customer base to expand 2–3% during 2017–2019.

Capital expenditure is projected to be $1,337 million, $1,124 million and $994 million for 2017, 2018 and 2019, respectively.

Peer Releases

IDACORP, Inc.’s IDA fourth-quarter operating earnings of 66 cents per share beat the Zacks Consensus Estimate of 61 cents by 8.2%. The stock has a Zacks Rank #3 (Hold)

American Electric Power Co., Inc. AEP, another Zacks Rank #3 stock, reported fourth-quarter  operating earnings of 67 cents per share, which surpassed the Zacks Consensus Estimate of 55 cents by 21.8%.

WEC Energy Group WEC, a Zacks Rank #3 stock, reported fourth-quarter adjusted earnings of 61 cents per share, a penny lower than both the Zacks Consensus Estimate and the year-ago figure.

Zacks Rank

Pinnacle West Capital currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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