Pinnacle West Capital CorporationPNW scaled a new 52-week high of $76.26 during Friday's trading session, and closed slightly lower at $75.76. This Phoenix, AZ-based company supplies electricity services throughout the state of Arizona via its subsidiaries. The stock has delivered a one-year return of about 34.1%.
Over the past 52 weeks, Pinnacle West's shares have ranged from a low of $56.01 on Jun 26, 2015 to a high of $76.26 on Jun 3, 2016. The average volume of shares traded over the last three months is approximately 0.8 million.
What is Driving the Stock?
We remind investors that the ongoing improvement in Arizona's economy, fueled by the rapidly developing Phoenix Metropolitan Area, has been driving Pinnacle West's performance. Notably, employment rates witnessed year-over-year growth of 3.6% in the first quarter in the region, above the national average. Moreover, single-family housing permits surged roughly 35% in the quarter. These factors should continue to expand the company's customer base and improve its retail sales.
Pinnacle West believes that it has better growth prospects in terms of jobs, income, consumer spending, and commercial and residential settlements in 2016, with the retail customer base expected to grow about 2-3% annually in the 2016-2018 period. Improvement in these aspects should bolster the company's top line going forward. In the first quarter, Pinnacle West's retail customer count inched up 1.3% year over year.
In addition, Pinnacle West's consistent investments in traditional generation, transmission & distribution lines will boost its performance over the long haul. Out of a total projected outlay of $3.6 billion, the company expects to spend around $464 million in transmission, $1,100 million in distribution and $736 million in traditional generation business in the 2016-2018 timeframe. These initiatives will allow Pinnacle West to continue providing reliable services to its customers.
Besides expanding its utility infrastructure, the company continues to focus on enhancing its renewable capacity. Through its partnership with the Arizona Public Service (APS), the company is constructing a 40-megawatt utility-scale solar facility - Red Rock Solar - aimed at offering innovative solutions to customers. In 2016, the company intends to spend $110 million in renewable generation.
Zacks Rank & Key Picks
Pinnacle West currently carries a Zacks Rank #2 (Buy).
Other favorably placed stocks in the same space include Spark Energy, Inc. SPKE , Avangrid, Inc. AGR and Black Hills Corporation BKH . While Spark Energy sports a Zacks Rank #1 (Strong Buy), both Avangrid and Black Hills Corporation hold a Zacks Rank #2 (Buy).