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1. Company Snapshot

1.a. Company Description

Pinnacle West Capital Corporation, through its subsidiary, Arizona Public Service Company, provides retail and wholesale electric services primarily in the state of Arizona.The company engages in the generation, transmission, and distribution of electricity using coal, nuclear, gas, oil, and solar generating facilities.Its transmission facilities include approximately 5,814 pole miles of overhead lines and approximately 74 miles of underground lines; and distribution facilities comprise approximately 11,258 miles of overhead lines and approximately 22,821 miles of underground primary cable, as well as owns and maintains 475 transmission and distribution substations.


The company also owns or leases approximately 6,323 megawatts of regulated generation capacity.It serves approximately 1.3 million customers.Pinnacle West Capital Corporation was incorporated in 1985 and is headquartered in Phoenix, Arizona.

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1.b. Last Insights on PNW

Pinnacle West Capital Corporation's recent performance was driven by robust retail customer growth, increasing by 2.1% year-over-year, and favorable regulatory developments. The company's strong business fundamentals and growth catalysts, including robust residential growth and increasing demand from Arizona's expanding semiconductor industry, are expected to continue driving its performance. Additionally, Pinnacle West's solid balance sheet and reliable operations provide a stable foundation for the company's future growth.

1.c. Company Highlights

2. Pinnacle West Capital's Strong Q4 Earnings and Growth Prospects

Pinnacle West Capital Corporation reported a strong fourth-quarter earnings, with earnings per share (EPS) of $0.13, significantly beating analyst estimates of $0.05. The company's full-year earnings came in at $5.05 per share, landing in the upper half of its updated guidance range. Revenue growth is expected to continue, with analysts estimating a 6.8% increase in revenues for the next year. The company's financial performance was driven by record demand levels, top-quartile reliability, and a top-quartile customer experience.

Publication Date: Mar -01

📋 Highlights
  • Financial Turnaround:: Earnings surged to $0.13/share in Q4 2025 vs. a $0.06 loss in Q4 2024, with annual EPS of $5.05 exceeding guidance and 2026 guidance reiterated at $4.55–$4.75/share.
  • Grid Performance:: Set a system peak of 8,648 MW and achieved 100% summertime capacity factor at Palo Verde, reflecting top-quartile reliability and customer satisfaction.
  • Customer Growth:: Commercial/industrial demand grew, driven by TSMC’s second Arizona fab ramping in 2027 and a third under construction, supporting 4.5 GW of high-load factor demand.
  • Capital Program:: Maintains 7–9% annual rate base growth through 2028, with $5–7% annual sales growth forecast from high-load factor and residential expansion.
  • Regulatory Progress:: Rate case on track for May hearings, while HoldCo debt at 17% (vs. mid-teens target) and FFO/debt ratio forecast at 14–16% with a 100 bps cushion.

Operational Highlights

The company served record demand levels, with APS setting a new system peak of 8,648 megawatts, and Palo Verde operating at 100% summertime capacity factor. The customer base is becoming increasingly diverse, with growth among commercial and industrial customers, including chip manufacturing and data centers. TSMC continues to expand its footprint in Arizona, with a second fab moving to full production in 2027 and a third fab under construction.

Rate Case and Regulatory Updates

The company's rate case remains on track, with staff and intervener testimony expected next month and hearings scheduled to begin in May. The company is working closely with the commission and stakeholders to support Arizona's growth, reduce regulatory lag, and ensure appropriate cost allocation. The recent formula rate approval for UNS is seen as a positive development, but the company notes material differences between the situation for the UNS gas case and APS.

Growth Prospects and Capital Program

The company's sales growth forecast of 5% to 7% annually over the next five years is based on existing demand and projects that are already in development or under construction. The company's capital program remains focused on reliability, grid resiliency, and meeting the growing needs of its customers. The rate base growth guidance remains unchanged at 7% to 9% through 2028.

Valuation and Credit Metrics

With a P/E Ratio of 19.47, P/B Ratio of 1.7, and EV/EBITDA of 14.01, the company's valuation multiples indicate a reasonable pricing. The company's FFO to debt ratio is expected to be around 14% to 16% throughout the forecast period, with a goal of maintaining a 100 basis point cushion. The HoldCo debt percentage of total debt landed at 17% at the end of 2025, in line with the targeted mid-teens range.

3. NewsRoom

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Pinnacle West Capital Corporation $PNW Stock Position Trimmed by Dynamic Technology Lab Private Ltd

Mar -09

Source: defenseworld.net

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Pinnacle West Capital Corporation $PNW Shares Purchased by Barclays PLC

Mar -09

Source: defenseworld.net

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DNB Asset Management AS Increases Stake in Pinnacle West Capital Corporation $PNW

Mar -04

Source: defenseworld.net

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Pinnacle West Capital Corp (PNW) Q4 2025 Earnings Call Highlights: Strong Sales Growth Amidst Regulatory Challenges

Feb -25

Source: gurufocus.com

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Pinnacle West Capital Corporation (PNW) Q4 2025 Earnings Call Transcript

Feb -25

Source: seekingalpha.com

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Pinnacle West (PNW) Beats Q4 Earnings and Revenue Estimates

Feb -25

Source: zacks.com

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Pinnacle West Beats Q4 Earnings and Sales Estimates, to Invest $8B

Feb -25

Source: zacks.com

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Pinnacle West posts quarterly profit on higher rates, robust power demand

Feb -25

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.42%)

6. Segments

Retail Electric Service - Residential

Expected Growth: 3.5%

The 3.5% growth in Retail Electric Service - Residential from Pinnacle West Capital Corporation is driven by increasing demand for electricity in Arizona, fueled by population growth, hot desert climate, and rising adoption of electric vehicles. Additionally, investments in energy efficiency programs and grid modernization contribute to the growth.

Retail Electric Service - Non-Residential

Expected Growth: 3.2%

The 3.2% growth in Retail Electric Service - Non-Residential segment of Pinnacle West Capital Corporation is driven by increasing commercial and industrial activities in Arizona, favorable weather conditions, and rising demand for electricity from data centers and other non-residential customers.

Wholesale Energy

Expected Growth: 4.5%

Pinnacle West Capital Corporation's Wholesale Energy segment growth of 4.5% is driven by increasing demand for renewable energy, favorable weather conditions, and strategic investments in grid modernization. Additionally, the company's focus on energy efficiency programs and load management initiatives contribute to the growth. Furthermore, the rising popularity of electric vehicles and electrification of transportation also support the segment's expansion.

Transmission Services for Others

Expected Growth: 3.8%

Pinnacle West Capital Corporation's Transmission Services for Others segment growth of 3.8% is driven by increasing demand for reliable and efficient transmission infrastructure, expansion of renewable energy sources, and investments in grid modernization. Additionally, the company's strategic partnerships and cost-saving initiatives contribute to the segment's growth.

Other Sources

Expected Growth: 3.0%

Pinnacle West Capital Corporation's 3.0% growth in Other Sources is driven by increasing demand for renewable energy, favorable regulatory policies, and strategic investments in energy storage and grid modernization. Additionally, the company's focus on energy efficiency programs and cost savings initiatives contribute to this growth.

7. Detailed Products

Electricity Generation

Pinnacle West Capital Corporation generates electricity through its subsidiaries, including Arizona Public Service Company (APS), which provides electricity to residential, commercial, and industrial customers in Arizona.

Transmission and Distribution

The company owns and operates a vast network of transmission and distribution lines, substations, and other infrastructure to deliver electricity to customers.

Renewable Energy

Pinnacle West Capital Corporation invests in renewable energy sources, such as solar and wind power, to reduce its carbon footprint and provide clean energy to customers.

Energy Efficiency

The company offers energy-efficient solutions and programs to help customers reduce their energy consumption and lower their energy bills.

Customer Service

Pinnacle West Capital Corporation provides customer service and support to its customers, including billing, payment, and outage reporting services.

8. Pinnacle West Capital Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Pinnacle West Capital Corporation is medium due to the availability of alternative energy sources such as solar and wind power.

Bargaining Power Of Customers

The bargaining power of customers for Pinnacle West Capital Corporation is low due to the lack of alternative energy providers in the region.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Pinnacle West Capital Corporation is medium due to the presence of multiple fuel suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Pinnacle West Capital Corporation is low due to the high barriers to entry in the energy industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for Pinnacle West Capital Corporation is high due to the presence of several competitors in the energy industry, including Arizona Public Service Company and Salt River Project.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 62.52%
Debt Cost 3.95%
Equity Weight 37.48%
Equity Cost 6.33%
WACC 4.84%
Leverage 166.78%

11. Quality Control: Pinnacle West Capital Corporation passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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PGE

A-Score: 6.8/10

Value: 6.9

Growth: 4.3

Quality: 4.4

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

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Pinnacle West Capital

A-Score: 6.5/10

Value: 6.5

Growth: 5.1

Quality: 4.1

Yield: 8.0

Momentum: 5.5

Volatility: 10.0

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Ameren

A-Score: 6.5/10

Value: 5.5

Growth: 4.8

Quality: 4.6

Yield: 6.0

Momentum: 8.0

Volatility: 10.0

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PPL

A-Score: 6.4/10

Value: 5.5

Growth: 4.2

Quality: 4.4

Yield: 7.0

Momentum: 7.0

Volatility: 10.0

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CenterPoint Energy

A-Score: 6.1/10

Value: 5.0

Growth: 3.4

Quality: 4.4

Yield: 5.0

Momentum: 9.0

Volatility: 10.0

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Alliant Energy

A-Score: 5.9/10

Value: 2.4

Growth: 4.2

Quality: 5.0

Yield: 6.0

Momentum: 7.5

Volatility: 10.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

101.28$

Current Price

101.28$

Potential

-0.00%

Expected Cash-Flows