Pinnacle West Capital Corporation
) has announced positive earnings surprises in 3 out of the last 4
quarters, and will be reporting again early next month. Earnings
estimates for this utility company have been on the rise,
underscoring its Zacks #1 Rank (Strong Buy). The stock also offers
a healthy dividend yield of 4%.
Q3 'Round the Corner
Pinnacle West Capital Corporation is expected to release its third
quarter earnings on November 2. The Zacks Consensus Estimate is at
$2.28 per share on expected revenue of $1.15 billion.
On August 2, Pinnacle West Capital reported second quarter 2012
earnings per share of $1.12, surpassing the Zacks Consensus
Estimate by 7.3% and last year's earnings by 43.5%. The strong
results were aided by warmer-than-normal weather, lower
infrastructure-related costs, higher transmission revenues, lower
fuel costs and improved mark-to-market valuations of fuel
Pinnacle West reported revenue of $878.6 million, growing 9.8% from
last year's $799.8 million. Revenues also surpassed the Zacks
Consensus Estimate of $861 million. An increase in Regulated
Electricity segment revenue was largely responsible for the overall
Earnings Momentum Inches Higher
The Zacks Consensus Estimate for 2012 is at $3.43 per share, which
is up nearly 2% in the past 90 days and suggests year-over-year
growth of 14.7%.
Pinnacle West Capital Corporation has been consistently paying
dividends to its shareholders. On October 18, 2012, the Board of
Directors raised its quarterly dividend rate to 54.5 cents from
52.5 cents. The new annualized payout rate of $2.18 per share
reflects an attractive dividend yield of 4%.
Shares of Pinnacle West Capital currently trade at 15.8x 12-month
forward earnings, a 1.3% premium to the peer group average of
15.6x. Its price-to-book ratio of 1.52 is at a discount of 7.8% to
the peer group average of 1.57. The price-to-sales is at 1.80x, a
58.9% premium to the peer group average of 1.37x.
The company has a trailing 12-month ROE of 9.5%, compared with the
peer group average of 10.0%.
The chart below depicts the full picture with shares of Pinnacle
West gaining 17.5% over the last six-month period.
Pinnacle West Capital Corporation was founded in 1920. The company
provides electricity services in the state of Arizona, through its
subsidiaries. The company is involved in the generation,
transmission and distribution of electricity from coal, nuclear,
gas and oil and renewable resources.
The company primarily competes with Southwest Gas Corporation (
). With approximately 6,663 employees, the company's market
capitalization is $5.93 billion.
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