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Pinnacle West (PNW) to Post Q3 Earnings: What's in Store?

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Pinnacle West Capital Corporation PNW will release third-quarter 2016 financial results before the market opens on Nov 3. Last quarter, this utility reported a negative earnings surprise of 5.26%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

The company’s management believes that economic fundamentals of Arizona will continue to improve in response to job growth, low mortgage rates and opening up of credit facilities over the next couple of years. This will drive demand for electricity, aiding top-line growth in the third quarter.

Meanwhile, Pinnacle West continues to focus on increasing its renewable capacity. As of Sep 27, 2016, its total renewable portfolio was 1,343 MW.  Above-average temperatures in July and August in its service territories are expected to aid the top line as higher air-conditioning requirements will boost electricity sales.

Earnings Whispers

Our proven model does not conclusively show that Pinnacle West Capital is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP:The Most Accurate estimate stands at $2.42, while the Zacks Consensus Estimate is pegged higher at $2.46, resulting in an Earnings ESP of -1.63%.

PINNACLE WEST Price and EPS Surprise




Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Though Pinnacle West’s Zacks Rank #2 increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Ranks #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Instead, here are a few utility players that you may consider, as they have the right combination of elements to post an earnings beat this quarter:

Avista Corp. AVA is slated to report earnings on Nov 1. It has an Earnings ESP of +4.76% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Duke Energy Corporation (DUK - Free Report) has an Earnings ESP of +1.29% and a Zacks Rank #3. It is slated to report earnings on Nov 4.

Pattern Energy Group Inc. PEGI has an Earnings ESP of +16.67% and a Zacks Rank #2. It is slated to report earnings on Nov 7.

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