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Why Is Pinnacle West (PNW) Up 6.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Pinnacle West (PNW - Free Report) . Shares have added about 6.6% 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 the most recent earnings report in order to get a better handle on the important drivers.

Pinnacle West Earnings & Revenues Beat Estimates in Q1

Pinnacle West Capital Corporation reported first-quarter 2022 operating earnings per share (EPS) of 15 cents, which surpassed the Zacks Consensus Estimate of 5 cents by 200%.

However, the bottom line decreased by 53.1% from the prior-year quarter’s earnings of 32 cents per share. The unfavorable decision on the general rate case was the primary driver for lower quarter-over-quarter earnings results.

Total Revenues

Total revenues of $783.5 million for the first quarter of 2022 surpassed the Zacks Consensus Estimate of $716 million by 9.4%. The top line also improved by 12.5% from $696.5 million in the prior-year quarter.

Operational Highlights

In the first quarter, total operating expenses were $729 million, up 12.3% from the year-ago quarter’s level due to an increase in the fuel and power purchase cost.

The operating income in the first quarter was $54.5 million, up 14.7% from the year-ago quarter’s reading of $47.5 million.

Net interest expenses were $65.4 million, up 5.7% from the year-ago quarter’s reading of $61.9 million.

Pinnacle West recorded robust 2.2% year-over-year customer growth and experienced stronger-than-projected sales growth of 4.4%.

Financial Highlights

Cash and cash equivalents were $14 million as of Mar 31, 2022 compared with $10 million as of Dec 31, 2021.

The long-term debt less current maturities was $7,226.6 million as of Mar 31, 2022, higher than $6,913.7 million as of Dec 31, 2021.

Net cash flow provided by the operating activities in the first three months of 2022 was $340.6 million compared with $202 million in the year-ago quarter.

Guidance

Pinnacle West reiterated 2022 EPS in the range of $3.90-$4.10. The Zacks Consensus Estimate for 2022 earnings of $4 per share is on par with the midpoint of the guided range.

The utility plans to invest $4.7 billion inthe 2022-2024 period to support customer growth, reliability and clean transition. Out of the total, PNW plans to invest $1.53 billion in 2022.

Pinnacle West reiterated the expectation of rate base growth at nearly 5-6% annually through 2024 from the 2020 levels.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Pinnacle West has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Pinnacle West has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Pinnacle West belongs to the Zacks Utility - Electric Power industry. Another stock from the same industry, NextEra Energy (NEE - Free Report) , has gained 9.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

NextEra reported revenues of $2.89 billion in the last reported quarter, representing a year-over-year change of -22.4%. EPS of $0.74 for the same period compares with $0.67 a year ago.

For the current quarter, NextEra is expected to post earnings of $0.75 per share, indicating a change of +5.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.

NextEra has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.


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