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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's Strong Q3 Earnings Driven by Transmission Revenues and Sales Growth

Pinnacle West Capital Corporation reported earnings of $3.39 per share in Q3 2025, a modest increase of $0.02 year-over-year, beating analyst estimates of $3.04. The company's financial performance was driven by higher transmission revenues and sales growth, with weather-normalized sales growth of 5.4%, comprising 6.6% C&I growth and 4.3% residential growth. The company's revenue growth is expected to continue, with analysts estimating a 3.8% increase in revenues for the next year. With a current P/E Ratio of 17.71 and P/S Ratio of 1.98, the market appears to have priced in moderate growth expectations.

Publication Date: Nov -10

📋 Highlights
  • Q3 2025 Earnings:: EPS rose to $3.39 (+$0.02 YoY), driven by 5.4% weather-normalized sales growth (6.6% C&I, 4.3% residential) and higher transmission revenues.
  • 2025 EPS Guidance Raised:: New range of $4.90–$5.10/share, reflecting strong sales and transmission revenue growth, with long-term sales growth guidance at 5–7% through 2030.
  • Desert Sun Power Plant:: 2-phase project to add 2,000 MW of natural gas generation, supporting 4.5 GW of committed demand from industrial, data center, and residential customers.
  • Capital Plan & Rate Base Growth:: $2.6B transmission investments through 2028 and $6B+ by 2034, targeting 7–9% annual rate base growth via strategic infrastructure expansion.
  • Equity Financing Strategy:: $1B–$1.2B equity issuance plan (2026–2028), leveraging ATM program to mitigate dilution, with 85% of 2026 equity needs already priced.

Investment in Generation and Transmission to Support Growth

The company is investing in generation and transmission to support growth, including the Desert Sun Power Plant, a 2-phase project expected to add up to 2,000 megawatts of reliable and affordable natural gas generation. The project is designed to serve existing customers and rising demand from extra-large energy users. Pinnacle West is working with customers to contract for Phase 2 capacity using its subscription model, which will contribute to rate base growth.

Guidance and Outlook

The company raised its 2025 EPS guidance to $4.90-$5.10 per share and expects earnings per share of $4.55-$4.75 in 2026, driven by robust customer and sales growth, increased transmission revenues, and focused O&M management. Pinnacle West expects weather-normalized sales growth of 4%-6% in 2026 and has raised its long-term sales growth range to 5%-7% through 2030. The company's capital plan through 2028 includes critical strategic investments in transmission and generation, expected to drive rate base growth of 7%-9%.

Financing Strategy and Capital Plan

Pinnacle West has updated its financing strategy, maintaining a balanced mix of debt and equity, with approximately 85% of its equity need for 2026 already priced. The company has a $1 billion to $1.2 billion equity issuance plan for 2026-2028, which they believe puts them in a good position. Their ATM equity issuance program has worked well, allowing them to time drawdowns and issuance with capital expenditures, and they plan to continue using this program to mitigate equity dilution.

Growth Prospects and Valuation

The company has a robust pipeline of demand, with 4.5 gigawatts of incremental demand committed, and 20 gigawatts of uncommitted load in their queue. With a ROE of 8.68% and ROIC of 3.29%, Pinnacle West appears to be generating returns in line with its cost of capital. The market's expectations appear to be fairly valued, given the company's growth prospects and current valuation multiples.

3. NewsRoom

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Electric Utilities And Pinnacle West In A Popping AI Bubble

Dec -02

Source: seekingalpha.com

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Pinnacle West Capital Corporation (NYSE:PNW) Receives Average Recommendation of “Hold” from Analysts

Nov -27

Source: defenseworld.net

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Pinnacle West Tops Q3 Earnings & Revenues, '25 EPS View Raised

Nov -04

Source: zacks.com

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Pinnacle West Capital Corporation (PNW) Q3 2025 Earnings Call Transcript

Nov -03

Source: seekingalpha.com

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Pinnacle West quarterly profit rises on robust electricity demand

Nov -03

Source: reuters.com

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Pinnacle West Reports 2025 Third-Quarter Financial Results

Nov -03

Source: businesswire.com

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Y Intercept Hong Kong Ltd Raises Stake in Pinnacle West Capital Corporation $PNW

Nov -03

Source: defenseworld.net

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Bessemer Group Inc. Sells 7,635 Shares of Pinnacle West Capital Corporation $PNW

Nov -03

Source: defenseworld.net

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

Stock-Card
Pinnacle West Capital

A-Score: 6.4/10

Value: 5.9

Growth: 5.2

Quality: 4.1

Yield: 8.0

Momentum: 5.5

Volatility: 10.0

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CenterPoint Energy

A-Score: 6.4/10

Value: 5.7

Growth: 3.4

Quality: 6.0

Yield: 5.0

Momentum: 8.5

Volatility: 10.0

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Ameren

A-Score: 6.4/10

Value: 5.3

Growth: 4.8

Quality: 4.5

Yield: 6.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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PPL

A-Score: 6.3/10

Value: 4.9

Growth: 4.2

Quality: 4.1

Yield: 7.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

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Alliant Energy

A-Score: 6.1/10

Value: 4.8

Growth: 4.2

Quality: 4.9

Yield: 6.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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PGE

A-Score: 6.1/10

Value: 6.8

Growth: 4.4

Quality: 4.1

Yield: 8.0

Momentum: 3.5

Volatility: 10.0

1-Year Total Return ->

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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

88.17$

Current Price

88.17$

Potential

-0.00%

Expected Cash-Flows