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Why Is Pinnacle West Capital (PNW) Up 4.7% Since the Last Earnings Report?

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A month has gone by since the last earnings report for Pinnacle West Capital Corporation (PNW - Free Report) . Shares have added about 4.7% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 Capital Q1 Earnings Beat Estimates

Pinnacle West Capital reported adjusted earnings per share of $0.21 in the first quarter of 2017 surpassing the Zacks Consensus Estimate of $0.15. Quarterly earnings increased 425 % year over year.

A low effective income tax rate positively impacted earnings by $0.05 per share and high lost fixed cost recovery revenues boosted earnings by $0.04 per share.

Total Revenue

In the quarter under review, total revenue of $677.7 million increased from the year-ago figure of $677.2 million by 0.07%.

Operational Highlights

Lower operations and maintenance expenses increased results by 11 cents per share compared with the prior-year period. The lower expenses were largely the result of fewer planned fossil plant maintenance in the first quarter of 2017 compared with year-ago, as well as lower employee benefit costs.

The effects of weather variations improved results by 3 cents per share compared with the year-ago period.

Total operating expense in the first quarter of 2017 decreased 3.6% to $604.2 million, primarily due to lower operation and maintenance expenses.

In the reported quarter, operating income increased 46.5% year over year to $73.5 million.

Interest expenses were up 4.1% to $47.3 million from $45.5 million a year ago.

Guidance

Pinnacle West Capital expects Customer growth to be sustainable as Arizona’s economy continues post-recession improvement.

Total projected capital expenditure from 2017, 2018 and 2019 is $1,337, $1,139 and $1,009 million, respectively.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

Pinnacle West Capital Corporation Price and Consensus

 

VGM Scores

At this time, the stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% 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.

Zacks' style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

While estimates have been broadly trending downward for the stock, the magnitude of this revision has been net zero. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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