Pinnacle West (PNW) Up 5.2% Since Last Earnings Report: Can It Continue?

Zacks Equity Research
FII vs. TROW: Which Stock Is the Better Value Option?

It has been about a month since the last earnings report for Pinnacle West (PNW). Shares have added about 5.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Pinnacle West due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Pinnacle West's Q4 Earnings Beat Estimates, Up Y/Y

Pinnacle West Capital Corporation delivered adjusted earnings per share of 23 cents in the fourth quarter of 2018, beating the Zacks Consensus Estimate of 17 cents by 35.3%. In the year-ago quarter, the company had reported adjusted earnings of 19 cents. Impressive operational performance and favorable Arizona economy supported the quarterly numbers.

In 2018, Pinnacle West Capital generated earnings of $4.54 per share, up from $4.35 in 2017.

Total Revenues

In the quarter under review, total revenues of $756.4 million fell 0.4% on a year-over-year basis.

In 2018, the company delivered revenues of $3.69 billion, up from $3.57 billion in 2017.

Operational Highlights

In fourth-quarter 2018, total Operating Expenses were $689.5 million, up 2.3% from the year-ago quarter’s tally.

Operating income declined 21.8% year over year to $66.9 million.

Interest expenses rose to $55.9 million from $50.6 million in the year-ago quarter.

Courtesy of the improving Arizona economy, customer volumes improved 1.7% year over year in 2018, resulting in an increase of 16 cents in the company’s earnings compared with 2017.

Guidance

Management projects 2019 EPS in the range of $4.75-$4.95, whose mid-point of $4.85 is higher than the current Zacks Consensus Estimate of $4.84.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 20% due to these changes.

VGM Scores

At this time, Pinnacle West has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Pinnacle West has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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