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Pinnacle West's (PNW) Focus on Renewable Energy Augurs Well

Pinnacle West Capital Corporation’s PNW focus on expanding its renewable capacity along with its systematic investments positions it well to benefit from the economic improvement in its service territories.

The Zacks Consensus Estimate for 2020 earnings is pegged at $4.80 per share, indicating growth of 0.63% from the year-ago reported figure. Also, the Zacks Consensus Estimate for 2020 revenues stands at $3.52 billion, suggesting 1.49% growth from the prior-year reported number. Additionally, long-term (three-five years) earnings growth of the company is pegged at 5.18%.

In the past three months, shares of the company have inched up 0.8% against the industry’s decline of 7.3%.


 

What’s Driving the Stock?

Pinnacle West’s investments in clean power generation, and transmission & distribution lines will help it serve customers efficiently. Improving economic conditions in its service territories are also driving demand.

The company projects capital expenditures of $1,331 million, $1,650 million and $1,725 million for 2020, 2021 and 2022, respectively. It expects to invest heavily in infrastructure upgrades to cater to its expanding customer base with responsibility and better efficiency.

Apart from growing its utility infrastructure, Pinnacle West continues to focus on enhancing its renewable strength. As of Mar 31, 2020, the company’s existing and planned renewable resources amounted to 1,951 megawatt (MW), which includes solar, wind, geothermal, biomass and biogas. Of this portfolio, energies worth 1,864 MW are currently in operation while the same worth 87 MW is under construction. The company plans to invest $1.66 billion in clean generation during the 2020-2022 time period.

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 Korea Electric Power Corporation KEP, NextEra Energy NEE and Fortis Inc. FTS, 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.

The Zacks Consensus Estimate for Korea Electric Power’s 2020 earnings has moved 31.4% north in the past 60 days. The company’s long-term (three-five years) earnings growth rate is pegged at 5%.

NextEra Energy delivered a trailing four-quarter earnings surprise of 2.39%, on average. The Zacks Consensus Estimate for current-year earnings has moved 0.4% up in the past 60 days.

Fortis came up with an earnings surprise of 6.28%, on average, in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has been revised 1% upward in the past 60 days.

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Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report
 
Korea Electric Power Corporation (KEP): Free Stock Analysis Report
 
NextEra Energy, Inc. (NEE): Free Stock Analysis Report
 
Fortis Inc. (FTS): Free Stock Analysis Report
 
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