We retain our Neutral recommendation on
Pinnacle West Capital Corp.
). The electric utility service provider at present holds a Zacks
Rank #2 (Buy).
Why the Reiteration?
Pinnacle West's series of back-to-back solar projects in
Arizona under its flagship AZ Sun program will substantially add
to future profitability. By the end of 2013, the company's
generation capacity is expected to reach 700 megawatts ("MW"). In
addition, a gradual recovery in the residential, commercial and
industrial markets will complement Pinnacle's rising generation
Its midstream endeavors are also likely to create outlets for
the company's services to regions outside Arizona thereby
expanding its revenue base. At present, Pinnacle is progressing
well with the development of two transmission lines - the Delaney
to Palo Verde line and the North Gila to Hassayampa line - which
will deliver renewable energy to the cities of California and
Furthermore, the company's strong financial position will
support its ongoing growth-related projects. An incremental
dividend also helps in retaining shareholder confidence in the
However, signs of increased operating and input costs as well
as weather irregularities are negatives to watch out for.
Moreover, stringent pro-environment regulations will continue to
add to the company's cost.
Other Stocks to Consider
Besides Pinnacle West, other utility operators currently
performing well are
Brookfield Infrastructure Partners L.P.
Pike Electric Corp.
Empresa Nacional Electricidad SA
). All of the above currently carry a Zacks Rank #1 (Strong Buy).
BROOKFIELD INFR (BIP): Free Stock Analysis
PIKE ELECTRIC (PIKE): Free Stock Analysis
PINNACLE WEST (PNW): Free Stock Analysis
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