Pinnacle West (PNW) Rides on Renewable Power, Customer Growth
Pinnacle West Capital Corporation’s PNW strategic investments in generation, transmission and distribution lines will help serve customers efficiently. Development activities in PNW’s service territories will improve its overall performance.
However, this currently Zacks Rank #4 (Sell) company has to face risks related to any unplanned outages in its nuclear generation facilities.
Tailwinds
Pinnacle West has a capital plan of $7.8 billion for 2023-2026, at an average annual growth rate of 5-7%. It expects transmission investments of more than $5 billion over the next ten years. The company projects long-term retail customer growth of 1.5-2.5% and weather-normalized retail electricity sales growth of 4-6%.
The ongoing investment and planned future investment will aid the company in delivering clean systems and affordable services, and developing innovative programs to assist its customers. The company sticks to its goal of decreasing operating and maintenance expenses per megawatt-hour.
PNW’s Metro Phoenix service region continues to witness solid growth in commercial activities. It expects new investments and business establishments to increase the demand for its services.
Pinnacle West continues to focus on enhancing its renewable capacity. During 2024-2026, the company is projected to invest nearly $2.2 billion in boosting clean power generation. Since 2020, it contracted more than 4,900 megawatts of clean energy and storage to be in service for Arizona Public Service Company’s customers by the end of 2025.
Headwinds
PNW has nuclear generation facilities that need to undergo scrupulous safety, security and other licensing requirements. The company will be affected by any unplanned outage in nuclear plants stemming from safety reasons and unexpected production stoppage. Moreover, if planned maintenance outages of the nuclear units continue longer than expected, they will adversely impact production and operations.
The company is also exposed to changing interest rate risks. Still-high interest rates will increase PNW’s borrowing costs and can adversely impact the company's operating and financial results.
Stocks to Consider
Some better-ranked stocks from the same industry are DTE Energy DTE, NiSource Inc. NI and Duke Energy Corp. DUK, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DTE’s long-term (three-to-five-year) earnings growth rate is 6%. The Zacks Consensus Estimate for DTE’s 2024 EPS indicates an increase of 16.9% from the previous year’s reported number.
NiSource’s long-term earnings growth rate is 7.15%. The Zacks Consensus Estimate for NI’s 2024 EPS implies an improvement of 6.9% from that recorded in 2023.
DUK’s long-term earnings growth rate is 5.26%. The Zacks Consensus Estimate for DUK’s 2024 EPS implies a year-over-year improvement of 7.6%.
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NiSource, Inc (NI) : Free Stock Analysis Report
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Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
