PNW
UtilitiesPinnacle West Capital
Price Chart
Market Data
Financials
XBRL · SEC EDGAR2008–2025(18yr)| Metric | FY 2008 | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $3.2B | $3.2B | $3.3B | $3.2B | $3.3B | $3.5B | $3.5B | $3.5B | $3.5B | $3.6B | $3.7B | $3.5B | $3.6B | $3.8B | $4.3B | $4.7B | $5.1B | $5.3B | +4.2% |
| Gross Profit | — | — | — | — | — | — | — | — | $2.4B | $2.6B | $2.6B | $2.4B | $2.6B | $2.7B | $2.7B | $2.9B | $3.3B | $3.4B | +3.2% |
| Gross Margin | — | — | — | — | — | — | — | — | 69.3% | 72.5% | 70.8% | 70.0% | 72.3% | 69.7% | 62.3% | 61.8% | 64.4% | 63.8% | -0.6pp |
| Operating Income | $582.6M | $610.2M | $723.9M | $746.5M | $851.8M | $846.3M | $811.2M | $854.6M | $856.0M | $934.4M | $773.7M | $672.0M | $788.2M | $805.3M | $731.9M | $824.6M | $1.0B | $1.1B | +5.5% |
| Operating Margin | 18.1% | 19.2% | 22.2% | 23.0% | 25.8% | 24.5% | 23.2% | 24.4% | 24.5% | 26.2% | 21.0% | 19.4% | 22.0% | 21.2% | 16.9% | 17.6% | 19.7% | 20.0% | +0.2pp |
| Net Income | $242.1M | $68.3M | $350.1M | $366.9M | $413.2M | $440.0M | $423.7M | $456.2M | $461.5M | $507.9M | $530.5M | $557.8M | $570.1M | $635.9M | $500.8M | $518.8M | $626.0M | $631.6M | +0.9% |
| Net Margin | 7.5% | 2.2% | 10.7% | 11.3% | 12.5% | 12.7% | 12.1% | 13.1% | 13.2% | 14.2% | 14.4% | 16.1% | 15.9% | 16.7% | 11.6% | 11.0% | 12.2% | 11.8% | -0.4pp |
| Free Cash Flow | -$87.5M | $302.7M | $2.1M | $241.2M | $281.6M | $137.0M | $189.0M | $18.2M | -$252.1M | -$290.7M | $99.0M | -$234.7M | -$360.2M | -$613.5M | -$466.0M | -$638.7M | -$639.4M | -$819.5M | -28.2% |
| FCF Margin | -2.7% | 9.5% | 0.1% | 7.4% | 8.5% | 4.0% | 5.4% | 0.5% | -7.2% | -8.2% | 2.7% | -6.8% | -10.0% | -16.1% | -10.8% | -13.6% | -12.5% | -15.3% | -2.9pp |
| EPS (Diluted) | $2.40 | $0.67 | $3.27 | $3.09 | $3.45 | $3.66 | $3.58 | $3.92 | $3.95 | $4.35 | $4.54 | $4.77 | $4.87 | $5.47 | $4.26 | $4.41 | $5.24 | $5.05 | -3.6% |
1. THE BIG PICTURE
Pinnacle West Capital is an "Arizona steward" whose financial health is decoupled from its operational success. While it benefits from a surge in data centers and semiconductor manufacturing in its territory, Pinnacle West Capital is currently earning "well below its allowed return" because its massive infrastructure investments outpace the rate increases granted by regulators (8-K). It is a company that owns one of the nation’s premier carbon-free assets in the Palo Verde nuclear station but remains financially vulnerable to a single 1% shift in local weather patterns (Risks).
2. WHERE THE RISKS HIT HARDEST
Pinnacle West Capital’s primary strength, its Reliability Focus and "Ten-Year Transmission Plan" (Business), is directly threatened by Regulatory Cost Recovery risks. Pinnacle West Capital’s strategy depends on "infrastructure hardening" and "advanced grid technologies," yet the ACC recently denied its Fire Mitigation deferral request and forced other recovery matters into the 2025 Rate Case (10-Q). This creates a bottleneck: Pinnacle West Capital must spend to support Arizona’s growth, but the ACC’s authority to "modify final orders" (Risks) creates a permanent cloud over whether those billions in CapExCapExCapital Expenditures — money spent on physical assets like factories, servers, or infrastructure will ever be recovered.
Furthermore, the Nuclear Operational Advantage provided by Palo Verde is offset by Nuclear Operational Risks. While management cites the plant as a key differentiator (Competitive Position), the facility carries a $24.2 million retrospective premium liability and is the subject of ongoing litigation regarding the Department of Energy’s failure to dispose of spent fuel (Risks).
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a company that is highly efficient at generating paper profits but struggles to generate actual cash. Pinnacle West Capital boasts the highest net margin in its peer group at 16.9%, yet it ranks near the bottom in free cash flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin at -11.0% (Peer Benchmarking). This discrepancy highlights a capital-intensive business model where accounting earnings are overshadowed by the heavy cost of building the "modern interactive grid" described in its strategic priorities.
While quarterly revenue grew to $1.13 billion from $1.10 billion (8-K), Pinnacle West Capital’s TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth of +4.2% is the slowest among its peers, trailing FirstEnergy (+12.0%) and NiSource (+23.5%) significantly (Peer Benchmarking). Sentiment appears cautious; short interest stands at 7.7% of the float, suggesting that investors are hedging against the outcome of the 2025 Rate Case or the $25 million net income hit that follows a mere 1% drop in residential sales volume (Risks).
4. IS IT WORTH IT AT THIS PRICE?
At 17.9x forward earnings, Pinnacle West Capital trades exactly in line with the peer median (Peer Benchmarking). The market is pricing in a long-term growth rate of 1.6% (CAPM analysis). This valuation appears "at fair value" given Pinnacle West Capital’s current constraints. While the 3.6% dividend yield is competitive, it is matched by FirstEnergy and surpassed by Edison International’s 5.0% yield (Peer Benchmarking).
For this price to be "right," Pinnacle West Capital must secure a substantial portion of its requested $579.5 million base rate increase (10-Q). If growth were to accelerate toward a GDP-pace of 2.5%, the justified multiple would rise to 21.2x; however, the current negative FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin of -11.0% makes it difficult to justify a premium over peers like Edison International, which maintains a positive FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin of 2.9% (Peer Benchmarking).
5. WHAT WOULD CHANGE THIS VIEW?
- Constructive if the ACC approves the majority of the $579.5 million rate increase requested in the 2025 Rate Case, which would finally align actual returns with allowed returns.
- Cautious if FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin remains deeply negative while peers continue to show better cash conversion, signaling that the cost of servicing Arizona’s growth is structurally higher than anticipated.
- Cautious if weather-normalized residential sales volume fluctuates by more than 1%, as the resulting $25 million hit to net income could jeopardize the 2026 earnings guidance of $4.55 to $4.75 per share (Risks, 8-K).
6. BOTTOM LINE
Structural Advantage: Ownership and operation of the Palo Verde Generating Station provides a massive, carbon-free baseload power source that is essential to Arizona’s industrial expansion.
Bottom Line: Pinnacle West Capital is a stable but cash-constrained utility whose near-term upside is entirely hostage to a pending regulatory decision.
1. Top 5 Material Risks
- Regulatory Cost Recovery: Pinnacle West Capital’s financial condition depends on the ACC’s approval of retail electric rates and the timely recovery of costs. The ACC has the authority to reopen prior decisions and modify final orders, creating uncertainty regarding Pinnacle West Capital’s ability to fully recover costs.
- Sales Volume Sensitivity: Demand for electricity is highly seasonal and sensitive to weather. A 1% variation in annual residential and small commercial kWh sales projections can increase or decrease annual net income by approximately $25 million, while a 1% variation in large commercial and industrial kWh sales impacts net income by approximately $7 million.
- Nuclear Operational Risks: As the operator of the Palo Verde nuclear facility, Pinnacle West Capital faces broad NRC oversight. Noncompliance can lead to unit shutdowns or civil penalties. Pinnacle West Capital is also subject to retrospective premium adjustments of approximately $24.2 million under its nuclear property insurance policies if losses exceed accumulated funds.
- Environmental Compliance: Changes in environmental laws regarding air emissions, water quality, and coal combustion products could increase capital and operating costs. If these costs are not fully recoverable from customers, they could have a material adverse effect on financial results.
- Wildfire Liability: Pinnacle West Capital faces risks related to wildfires, including potential lawsuits regardless of fault. Pinnacle West Capital may not be able to recover damages or costs from insurance or through rates, which could lead to credit rating downgrades and financial distress.
2. Company-Specific Risks
- Water Scarcity: The southwestern United States’ limited water supply poses a risk to Pinnacle West Capital’s thermal electricity generation. Prolonged drought and competition for treated effluent could limit the water available for power plant cooling.
- Data Center Load Uncertainty: While data centers supporting AI represent potential growth, Pinnacle West Capital faces risks of stranded costs if projected demand does not materialize or if Pinnacle West Capital cannot secure regulatory approval for necessary infrastructure in a timely manner.
- Workforce Retirement: Approximately 26.1% of Pinnacle West Capital’s employees are eligible to retire by the end of 2030, creating risks related to the retention of qualified personnel and increased competition for talent.
- Structural Subordination: Because Pinnacle West Capital is a holding company, its debt securities are structurally subordinated to the debt and other obligations of its subsidiaries, meaning subsidiary assets are available to service subsidiary debt before being available to the parent.
3. Regulatory/Legal Risks
- FERC Penalties: Under the Energy Policy Act of 2005, FERC can impose penalties of approximately $1.2 million per day per violation for failure to comply with mandatory electric reliability standards.
- Nuclear Incident Liability: Under federal law, Pinnacle West Capital may be required to pay up to $144.9 million (capped at $21.6 million per year) for liabilities arising from a nuclear incident at any domestic nuclear power plant.
- ACC Equity Requirements: An ACC financing order requires Pinnacle West Capital to maintain a common equity ratio of at least 40% and prohibits the payment of common dividends if such payment would reduce the common equity below that threshold.
4. Financial Impact Map
Regulatory Cost Recovery → Net Income/Cash Flows → Dependent on satisfactory resolution of rate proceedings and adjustor recovery mechanisms before the ACC and FERC. Sales Volume Sensitivity → Net Income → 1% variation in residential/small commercial sales impacts net income by ~$25 million; 1% variation in large commercial/industrial sales impacts net income by ~$7 million. Nuclear Operational Risks → Results of Operations/Financial Condition → Potential $24.2 million retrospective premium assessment and potential liability of up to $144.9 million for nuclear incidents. Environmental Compliance → Capital Expenditures/Operating Expenses → Increased costs for emissions and waste handling that may not be recoverable in rates. Wildfire Liability → Financial Condition/Results of Operations → Potential for unrecoverable damages, credit rating downgrades, and market volatility for common stock.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 8-K | Feb 2026 | — |
| 10-K | Feb 2026 | Dec 2025 |
| 10-Q | Nov 2025 | Sep 2025 |
| 14A | Apr 2025 | — |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Pinnacle West Capital Reaffirms 2026 EPS Guidance Range of $4.55–$4.75
- ▸2026 EPS guidance reaffirmed at $4.55–$4.75 per diluted share
- ▸Guidance provided on a weather-normalized, consolidated basis
- ▸BMO Capital raised price target to $107 from $98
- ▸Citi increased price target to $109 from $100
- ▸Mizuho raised price target to $103 from $91
Pinnacle West Q4 EPS $0.13 beats by $0.08; Barclays raises target to $97
- ▸Q4 EPS $0.13, beating analyst estimates by $0.08
- ▸Q4 revenue $1.13B, missing forecasts by $40M
- ▸FY2025 EPS $5.05, landing in upper half of guidance
- ▸FY2026 EPS guidance range set at $4.55–$4.75
- ▸Barclays raises price target from $90 to $97, maintains Equal Weight