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Will Pinnacle West (PNW) Q3 Earnings Disappoint Estimates?

Pinnacle West Capital Corp.PNW will release third-quarter 2015 financial results before the market bell on Oct 30, 2015. The company reported a negative earnings surprise of 9.84% in the previous quarter. Let's see how things are shaping up at Pinnacle West Capital prior to this announcement.

Factors to Consider

Pinnacle West Capital's earnings might be hurt by the expiration of a long-term wholesale contract at the end of 2014.

Coal still dominates Pinnacle West's generation mix and makes the company vulnerable to stringent regulations by federal, state and local regulatory agencies. However, the company is adding renewable energy sources to lower its dependence on coal.

During the quarter, the company's APS Solar Partner Program made its first installations - an initiative that will see solar panels installed on 1,500 customer homes across the Valley of the Sun at no cost to the host customer. This program will generate 10 MW of green electricity.

The warmer-than-expected temperature during the third quarter is expected to have a positive impact on utility demand.

Earnings Whispers?

Our proven model does not conclusively show that Pinnacle West Capital is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here.

Zacks ESP : Pinnacle West Capital has an Earnings ESP of -0.86%. This is because the Most Accurate estimate stands at $2.31 while the Zacks Consensus Estimate is pegged at $2.33.

Zacks Rank : Pinnacle West Capital's Zacks Rank #4 and -0.86% ESP make an earnings surprise call unlikely this season.

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

Stocks to Consider

Here are a few operators in the electric utility space worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter.

Ameren Corp. AEE has an Earnings ESP of +1.53% and carries a Zacks Rank #2.

Duke Energy Corp. DUK has an Earnings ESP of +0.66% and carries a Zacks Rank #2.

WEC Energy Group, Inc. WEC has an Earnings ESP of +3.39% and carries a Zacks Rank #3.

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PINNACLE WEST (PNW): Free Stock Analysis Report

AMEREN CORP (AEE): Free Stock Analysis Report

WEC ENERGY GRP (WEC): Free Stock Analysis Report

DUKE ENERGY CP (DUK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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