We expect electricity service provider
Pinnacle West Capital Corp.
) to surpass our expectations when it reports third quarter 2013
earnings results before the market opens on Oct 31.
Why a Likely Positive Surprise?
Our proven model shows that Pinnacle West is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP:
(Expected Surprise Prediction), which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is at +0.46%. This is a meaningful and leading
indicator of a likely positive earnings surprise for shares.
Zacks #3 Rank (Hold):
The company at present carries a Zacks Rank #3 (Hold). Note that
stocks with Zacks Ranks of #1, #2 and #3 have a significantly
higher chance of beating earnings. The Sell rated stocks (#4 and
#5) should never be considered going into an earnings
The combination of Pinnacle West's Zacks Rank #3 and +0.46%
ESP makes us confident of an earnings beat this quarter.
What is Driving the Better-than-Expected
The steady improvement in the Arizona market with a
concomitant rise in customer base is expected to be the key
earnings driver for Pinnacle West. Pinnacle West's increased
transmission investments are also anticipated to fetch good
The company will stand to benefit from a decline in interest
expenses owing to its lower debt position, which as of Jun 30,
2013 stood at $2.8 billion compared with $3.2 billion as of Dec
Pinnacle West during the second quarter projected that its
interest expense, net of allowances for borrowed and equity funds
used for construction in 2013 will decrease in the range
$160-$170 million from $175-$185 million forecast earlier.
Pinnacle West's flagship AZ Sun program which is progressing
well will also propel its growth trajectory. However, weather
variations will likely be a deterring factor that might affect
Other Stocks to Consider
Pinnacle West is not the only firm looking up this earnings
season. We also see likely earnings beats coming from these three
Alliant Energy Corp.
) has an earnings ESP of +4.55% and carries a Zacks Rank #2
) has an earnings ESP of +1.91% and carries a Zacks Rank #2
Great Plains Energy Inc.
) has an earnings ESP of +3.26% and carries a Zacks Rank #2
CLECO CORP (CNL): Free Stock Analysis Report
GREAT PLAINS EN (GXP): Free Stock Analysis
ALLIANT ENGY CP (LNT): Free Stock Analysis
PINNACLE WEST (PNW): Free Stock Analysis
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