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Why Is Pinnacle West (PNW) Down 0.8% 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 lost about 0.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Pinnacle West due for a breakout? 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 Q2 Earnings & Revenues Beat Estimates

Pinnacle West Capital Corporation reported second-quarter 2022 operating earnings per share (EPS) of $1.45, which surpassed the Zacks Consensus Estimate of $1.30 by 11.5%.

However, the bottom line decreased by 24.1% from the prior-year quarter’s earnings of $1.91 per share. The unfavorable decision on the general rate case was the primary driver for lower quarter-over-quarter earnings.

Total Revenues

Total revenues of $1,061.7 million for the second quarter of 2022 surpassed the Zacks Consensus Estimate of $954 million by 11.3%. The top line also improved by 6.1% from $1,000.2 million in the prior-year quarter.

Operational Highlights

In the second quarter, total operating expenses were $838.6 million, up 16.2% from the year-ago quarter’s level, due to an increase in the fuel and power purchase cost along with higher operating and maintenance expenses.

The operating income in the second quarter was $223.1 million, down 19.9% from the year-ago quarter’s reading of $278.4 million.

Net interest expenses were $68.1 million, up 8.4% from the year-ago quarter’s reading of $62.8 million.

Pinnacle West recorded robust 2% year-over-year customer growth and experienced stronger-than-projected sales growth of 3.2%.

Financial Highlights

Cash and cash equivalents were $29.2 million as of Jun 30, 2022 compared with $10 million as of Dec 31, 2021.

The long-term debt less current maturities was $7,241.3 million as of Jun 30, 2022, higher than $6,913.7 million as of Dec 31, 2021.

Net cash flow provided by operating activities in the first six months of 2022 was $588.3 million compared with $312.4 million in the year-ago period.

Guidance

Pinnacle West reiterated 2022 EPS in the range of $3.90-$4.10. The Zacks Consensus Estimate for 2022 earnings of $3.97 per share is 0.8% lower than the midpoint of the guided range of $4.00.

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

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Pinnacle West has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. 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 is part of the Zacks Utility - Electric Power industry. Over the past month, American Electric Power (AEP - Free Report) , a stock from the same industry, has gained 2.4%. The company reported its results for the quarter ended June 2022 more than a month ago.

AEP reported revenues of $4.59 billion in the last reported quarter, representing a year-over-year change of +20.1%. EPS of $1.20 for the same period compares with $1.18 a year ago.

AEP is expected to post earnings of $1.51 per share for the current quarter, representing a year-over-year change of +5.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.4%.

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


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