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Should You Add Pinnacle West (PNW) to Your Portfolio Now?

Zacks

Pinnacle West Capital Corporation’s PNW continuous investments in traditional generation, transmission & distribution lines will help it serve customers efficiently. Improving economic conditions in its service territories has also been positively impacting demand.

Adding this Zacks Rank #2 (Buy) stock to your portfolio now is a good idea, given the following positive factors.

Positive Growth Projections: The Zacks Consensus Estimate for earnings is $4.27 on revenues of $3.59 billion for 2017. The bottom line is expected to improve 8.1% year over year and the top-line projection is 2.6% higher. For 2018, the Zacks Consensus Estimate for earnings is pegged at $4.49 on $3.72 billion revenues. While earnings represent a 5.2% rally, revenues reflect a 3.7% rise.

Pinnacle West has long-term expected earnings per share growth rate of 5.2%.

Estimates Moving Up: The Zacks Consensus Estimate has witnessed upward revisions in the last 60 days. Estimates for 2017 and 2018 have inched up 0.9% and 0.4%, respectively in the last 60 days.

Strong Return: Pinnacle West’s shares have rallied 19.5% in the last 12 months, outperforming the industry’s gain of 8.6%.



Positive Earnings Surprise History: Pinnacle West surpassed the Zacks Consensus Estimate in two of the last four quarters with an average beat of nearly 15.5%.

Growth Drivers

Pinnacle West’s subsidiary, Arizona Public Service (“APS”), is the largest and longest-serving electric utility provider in Arizona. APS customers are expected to grow 1.5-2.5% in 2017 and registered a 1.8% increase in customers during the second quarter. Robust job growth rates and the opening up of credit to households is expected to benefit the Metro Phoenix housing market and drive demand upward.

Pinnacle West steadily invests in the diversification and expansion of its asset base. The company will emphasize primarily on expanding its traditional generation, distribution and transmission operations. The company expects to invest heavily in infrastructure upgrades to serve its expanding customer base.

Other Stocks to Consider

Some other stocks in the same industry worth considering are Fortis Inc. FTS sporting a Zacks Rank #1 (Strong Buy), CenterPoint Energy, Inc. CNP and NRG Energy NRG carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortis delivered a four-quarter average positive surprise of nearly 11%. The company’s long-term earnings growth rate is pegged at 5.5%.

CenterPoint Energy delivered a four-quarter average positive surprise of 10.3%. The company’s long-term earnings growth rate is pegged at 4.3%.

NRG Energy delivered a four-quarter average positive surprise of 457%. The company’s 2017 Zacks Consensus Estimate went up 33.3% in the last 60 days.

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