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Reasons to Add Pinnacle West Capital (PNW) to Your Portfolio Now

Pinnacle West Capital Corporation’s PNW strategic capital investment should further enhance its infrastructure and help create a clean generation portfolio. Given its strong growth, PNW makes a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment option at the moment.

Growth Projections

The Zacks Consensus Estimate for Pinnacle West Capital’s 2024 earnings per share (EPS) has moved up 1.5% to $4.76 in the past 60 days.

The Zacks Consensus Estimate for 2024 sales is pinned at $4.87 billion, indicating year-over-year growth of 3.7%.

PNW’s long-term (three- to five-year) earnings growth rate is 7.6%.

Debt Position

Currently, PNW’s total debt to capital is 58.95%, better than the industry’s average of 62.44%.

The time-to-interest earned ratio at the end of the fourth quarter of 2023 was 2.6. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

Dividend

Pinnacle West Capital continues to increase shareholders’ value through dividend payments. Currently, the company’s quarterly dividend is 88 cents per share, resulting in an annualized dividend of $3.52 per share, up 1.7% from the previous level of $3.46. PNW’s current dividend yield is 4.89%, better than the utility electric power industry’s 3.87%.

Systematic Investments

PNW’s consistent investments to upgrade and maintain the existing infrastructure help provide reliable services to its expanding customer base. The company has a capital plan of $7.8 billion for 2023-2026, at an average annual growth rate of 5-7%. PNW expects transmission investments of more than $5 billion over the next 10 years.

Clean Power Generation

Pinnacle West Capital 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. It is set to develop 1,600 megawatts (MW) of clean energy and storage, expected to be placed in service by 2024 for Arizona Public Service Company’s customers. PNW also plans to install more than 2,100 MW of energy storage by 2025, including the energy storage projects under purchase power agreements and Arizona sun retrofits.

Price Performance

In the past three months, Pinnacle West Capital’s shares have risen 3.9% against the industry’s 9.5% decline.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Other Stocks to Consider

A few other top-ranked stocks from the same industry are NiSource NI, Unitil Corporation UTL and DTE Energy DTE, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NI’s long-term earnings growth rate is 6%. The company delivered an average earnings surprise of 5.6% in the last four quarters.

The Zacks Consensus Estimate for UTL’s 2024 EPS has increased 0.3% to $2.92 in the past 90 days. The company delivered an average earnings surprise of 12.8% in the last four quarters.

DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for DTE Energy’s 2024 EPS implies a year-over-year increase of 17.1%.

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Zacks Investment Research