Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 12 Feb, 25 | PNW | Buy | USD 89.16 | USD 94.0 | USD 100.0 | 50 days | 12.2% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
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 overhead lines and underground lines; and distribution facilities, as well as owns and maintains transmission and distribution substations. The company was incorporated in 1985 and is headquartered in Phoenix, Arizona.
Customer Growth and Increased Sales: APS experienced a 2.3% increase in customer growth and a 5.9% rise in weather-normalized sales, boosting overall revenue.
Record Energy Demand: Due to extreme heat, APS customers set a new peak energy demand of 8,210 megawatts (MW) on August 4, 2024, surpassing the previous record of 8,162 MW in July 2023, leading to increased electricity sales.
Decreased Net Income: Pinnacle West reported a slight decline in net income, dropping from $398.2 million in Q3 2023 to $395.0 million in Q3 2024, reflecting a $3.2 million decrease.
Higher Operational Costs: The company faced increased expenses, including higher operations and maintenance costs, greater depreciation and amortization due to additional plant and intangible assets, and higher interest charges.
Key investment risks for Pinnacle West include regulatory uncertainties affecting electricity rates, rising operational and maintenance costs, weather-related demand volatility, and potential financial strain from infrastructure investments required to support Arizona’s rapid population growth and extreme climate conditions.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 89.16 | 79.0 | 94.0 | 100.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Pinnacle West Reports Third-Quarter 2024 Financial Results
Pinnacle West Capital Corp. (NYSE: PNW) announced consolidated net income attributable to common shareholders of $395.0 million, or $3.37 per diluted share, for the third quarter of 2024. This marks a slight decline from the $398.2 million, or $3.50 per diluted share, reported for the same period in 2023. The decrease of approximately $3 million is primarily attributed to higher operations and maintenance expenses, increased depreciation and amortization costs due to additional plant and intangible assets, higher interest charges, and elevated income taxes. These factors were partially offset by the positive effects of new customer rates and favorable weather conditions.
Impact of Record-Setting Summer Heat
For the second consecutive quarter, Arizona experienced historically high temperatures, making the summer of 2024 the hottest on record. Pinnacle West Chairman, President, and Chief Executive Officer Jeff Guldner noted that extreme heat drove increased energy consumption as customers sought to cool their homes and businesses. Despite the slight decline in net income, the combination of higher energy usage and a growing customer base contributed to strong overall financial performance.
Energy Demand and Operational Reliability
The company reported a 2.3% increase in customer growth and a 5.9% rise in weather-normalized sales during the quarter. Weather fluctuations also played a significant role in increasing customer energy consumption. Phoenix endured 113 consecutive days above 100 degrees, the longest streak in the state’s history, and shattered its previous record for 110-degree days, reaching 70 days compared to 55 in 2023. Consequently, APS customers set a new peak energy demand record of 8,210 megawatts (MW) on August 4, surpassing the prior record of 8,162 MW in July 2023.
Customer Support Amid Extreme Conditions
Pinnacle West emphasized its commitment to supporting customers facing higher energy costs due to prolonged extreme heat. APS expanded energy assistance programs, maintained a summer moratorium on service disconnections for past-due bills, and facilitated payment arrangements. The company also collaborated with more than 100 local non-profit and community organizations to provide resources for vulnerable populations. Guldner highlighted that APS remains one of the nation’s most reliable energy providers, offering rates below the national average while ensuring customers receive necessary support.
Innovative Response to Storm-Related Outages
Although the 2024 monsoon season was among the driest on record, powerful storms with hurricane-force winds impacted APS service areas. In July, severe storms with winds reaching 75 mph caused extensive damage, particularly in southwest Phoenix. APS crews undertook significant repairs, including rebuilding damaged transmission infrastructure. In an innovative move, APS leveraged its Cool Rewards smart thermostat program to reduce strain on the electric grid, marking the first time this program was used in such a targeted manner. The initiative, which includes over 95,000 smart thermostats, acts as a virtual power plant capable of conserving nearly 160 MW of energy.
Financial Outlook and Future Projections
Given the positive effects of weather conditions and increased customer growth through the first three quarters of 2024—partially offset by higher-than-expected operational costs—Pinnacle West has revised its full-year earnings guidance upward to a range of $5.00 to $5.20 per diluted share. Looking ahead, the company estimates its 2025 consolidated earnings to be in the range of $4.40 to $4.60 per diluted share on a weather-normalized basis.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Pinnacle West Capital Corporation (NYSE: PNW) at the closing price of USD 89.16, as on February 11, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Utilities Industry: Utilities - Regulated Electric
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| PNW Pinnacle West Capital Corp |
0.53 0.56% | 94.89 | 16.98 | 14.24 | 1.70 | 1.26 | 3.85 | 10.58 |
| NEE Nextera Energy Inc |
-1.83 2.72% | 65.44 | 15.77 | 17.61 | 4.52 | 2.61 | 7.10 | 12.28 |
| SO Southern Company |
-0.485 0.53% | 90.64 | 25.35 | 17.76 | 2.89 | 2.48 | 5.27 | 13.35 |
| DUK Duke Energy Corporation |
-0.915 0.75% | 120.50 | 20.54 | 16.34 | 2.60 | 1.59 | 5.34 | 11.98 |
| AEP American Electric Power Co Inc |
-0.83 0.78% | 106.19 | 19.17 | 16.18 | 2.58 | 1.91 | 4.83 | 12.39 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 11,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
This report has been issued by StockNextt which has an Ontario Business Identification Number 1000958347 and British Columbia registration Number FM1051529 is a trade name under Kalkine Canada Advisory Services Inc. having Business Number 761925130BC0001. Kalkine Canada Advisory Services Inc. and StockNextt are collectively referred to as “StockNextt”, “we”, “us”, and “our”. The website https://stocknextt.com and associated pages are published by StockNextt. The information in this report and on the StockNextt website has been prepared from a wide variety of sources, which StockNextt, to the best of its knowledge and belief, considers accurate. StcokNextt has made every effort to ensure the reliability of information contained in its reports, newsletters, and websites. All information represents our views at the date of publication and may change without notice. The information in this report does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products. Our reports contain general recommendations for investing in securities and other financial products. StockNextt does not offer financial advice based upon your personal financial situation or goals, and we shall not be held liable for any investment or trading losses you may incur by using the opinions expressed in our reports, publications, market updates, news alerts and corporate profiles. StockNextt does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. StockNextt’s general advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested. Please also read our Terms and conditions for further information. Employees and/or associates of StockNextt and its related entities may hold an interest in the securities or other financial products covered in this report or on the StockNextt website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.
Copyright © 2023 Krish Capital Pty Ltd. All rights reserved. No part of this website, or its content, may be reproduced in any form without our prior consent.
