Pinnacle West's (PNW) Investments, Clean Energy Aims Bode Well
Pinnacle West Capital Corporation’s PNW focus on the increasing use of renewable sources to generate power and its planned investments in strengthening its infrastructure position it well to benefit from the expected rise in demand in its service territories. Also, the company’s efforts to reduce costs will drive its earnings.
The Zacks Consensus Estimate for 2021 earnings is pegged at $4.89 per share, indicating growth of 0.41% from the year-ago reported figure. Also, the consensus mark for current-year revenues stands at $3.67 billion, suggesting 2.27% growth from the prior-year reported number. Additionally, long-term (three-five years) earnings growth of the company is pegged at 3.37%.
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past six months, shares of this utility have gained 10.7%, outperforming the industry’s rise of 5.4%.
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. After investing $1,262 million in 2020, it has plans to spend $1,500 million annually through the 2021-2023 time period. Moreover, through the implementation of new policies, the utility is lowering its Operations and Maintenance expenses, which will help keep customer rates low as well as enhance its customer benefits and shareholder value.
Apart from growing its utility infrastructure, Pinnacle West continues focusing on expanding its generation from renewable sources. Under the Integrated Resource Plan, the company expects to add 2,894 megawatt (MW) of clean energy to its portfolio. It also announced its goal to deliver 100% clean carbon-free electricity to customers by 2050, which includes a near-term target of achieving a resource mix that is 65% clean energy by 2030 with 45% coming from renewable energy.
Other electric utilities are also making efforts to supply clean and reliable energy to customers. Some of the companies, namely Duke Energy DUK, DTE Energy DTE and Xcel Energy Inc. XEL are planning to provide absolute clean energy by 2050.
Headwinds
However, Pinnacle West’s progress could be hindered by fluctuations in commodity prices, stringent environmental regulations and any unplanned outages in nuclear-generation facilities.
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