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Pinnacle West's (PNW) Focus on Clean Energy, CAPEX Bode Well

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Pinnacle West Capital Corporation’s (PNW - Free Report) strategic investments in strengthening its infrastructure and an intensified focus on utilizing renewable sources for power generation will help it capitalize on the expected demand surge for clean energy. Also, the company’s efforts to reduce costs will drive its earnings.

The Zacks Consensus Estimate for 2021 earnings is pegged at $4.95 per share, indicating growth of 1.64% from the year-ago reported figure. Also, the consensus mark for current-year revenues stands at $3.69 billion, suggesting 2.86% growth from the prior-year reported number. Additionally, long-term (three-five years) earnings growth of the company is pegged at 3.99%.

The stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, shares of the company have gained 16.5%, outperforming the industry’s rise of 11.4%.

Three Months Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

Tailwinds

Pinnacle West’s investments in clean power generation, and transmission and distribution lines will help it expand its customer base with more responsibility and better efficiency. After investing $1,262 million in 2020, it spent $363.8 million in the first three months of 2021. Also, the utility has plans to spend $1,500 million annually through the 2021-2023 time period. Moreover, it is working toward achieving cost savings, which in turn, will help keep the customer rates low as well as enhance its customer benefits and shareholder value.

Apart from growing its utility infrastructure, Pinnacle West continues to focus on expanding its generation from renewable sources. In the 2021-2023 time frame, the company will invest $1,112 million in increasing clean power generation. It also announced its goal to deliver 100% carbon-free electricity to customers by 2050, which includes a near-term target of attaining a resource mix that is 65% clean energy within 2030 with 45% coming from renewable sources.

Some other players from the same industry are also making efforts to supply clean energy to their customers and enrich the reliability of services. Companies like Duke Energy (DUK - Free Report) , DTE Energy (DTE - Free Report) and Xcel Energy (XEL - Free Report) have plans in place to provide absolute clean energy by 2050.

Headwinds

However, Pinnacle West’s progress could be hindered by fluctuations in commodity prices, stringent environmental regulations and unplanned outages in nuclear-generation facilities.

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