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Pinnacle West (PNW) in Q2 Earnings: A Beat in the Cards?

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We expect Pinnacle West Capital Corporation (PNW - Free Report) to beat expectations when it reports second-quarter 2017 results before the opening bell on Aug 3. Last quarter, this independent utility company reported a positive earnings surprise of 40.00%.

Why a Likely Positive Surprise?
    
Our proven model shows that Pinnacle West Capital is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates and Pinnacle West Capital has the right mix.

Zacks ESP: The Most Accurate estimate is pegged at $1.21 per share while the Zacks Consensus Estimate is pegged lower at $1.16 per share resulting in an Earnings ESP of +4.31%. This is a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pinnacle West Capital carries a Zacks Rank #3. The combination of Pinnacle West Capital’s favorable Zacks Rank #3 and a positive ESP makes us reasonably confident of a positive surprise this season.

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

Factors to Consider

Pinnacle West has experienced a modest expansion rate in retail customer growth and is targeting growth rate in the range of 1.5–2.5% in 2017. This is likely to have a positive impact the second quarter as well. This effect is likely to be witnessed in the quarter with improvement in Arizona’s economy and ongoing improvement in U.S. economic conditions.

Growth in employment continues to have a positive effect on the Metro Phoenix area's commercial and residential real estate markets. This above-average job growth is likely to reflect positively in the results by increasing demand for utility services.

The results of the company are also likely to improve since the first quarter backed by normalized weather conditions that are likely to lead to more customer conservation steps, energy efficiency programs and other distributed renewable generation initiatives throughout its service territory.

Pinnacle West Capital Corporation Price, Consensus and EPS Surprise

 

Other Stocks to Consider

Pinnacle West Capital is not the only company in the industry looking up this earnings season. We see likely earnings beats coming from these companies as well:

NiSource, Inc (NI - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. The company is expected to release second-quarter 2017 results on Aug 2.

The AES Corporation (AES - Free Report) has an Earnings ESP of +20.00% and holds a Zacks Rank #2. It is slated to report second-quarter 2017 earnings on Aug 8.

Pattern Energy Group Inc. (PEGI - Free Report) has an Earnings ESP of +23.08% and carries a Zacks Rank #2. It is slated to report second-quarter 2017 earnings on Aug 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

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