- Assessing Pinnacle West Capital (PNW) Valuation As Long Term Returns Contrast With Mixed Recent Share Performance
May 13, 2026
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Pinnacle West Capital (PNW) has drawn investor interest after recent share price moves, with the stock around $99.83 and mixed short term returns, including a decline over the past month and a gain over the past 3 months.
See our latest analysis for Pinnacle West Capital.
Recent share price moves tell a mixed story, with the stock down over the past month but ahead on a 90 day basis. At the same time, a 1 year total shareholder return of 16.5% and 5 year total shareholder return of 45.4% point to steadier long term momentum.
If you are comparing Pinnacle West Capital with other power and grid related plays, it could be worth scanning 38 power grid technology and infrastructure stocks
With Pinnacle West Capital valued around $99.83 and trading at a modest discount to the average analyst price target of $105.36 but at an 11.2% premium to some intrinsic estimates, is there still a buying opportunity here or is the market already pricing in future growth?
Most Popular Narrative: 5.7% Undervalued
With Pinnacle West Capital last closing at $99.83 and the most followed narrative pointing to a fair value of about $105.86, the gap is relatively modest but still meaningful for valuation focused investors.
Strong customer growth and large-scale infrastructure investments are associated with significant revenue and earnings expansion potential, especially from commercial and industrial demand. Regulatory modernization and grid upgrades are supporting cost recovery and operational efficiency, and positioning the company for long-term stability within the current framework.
Read the complete narrative.
The core narrative focuses on steady demand, firmer margins, and a future earnings multiple that is calibrated rather than aggressive. The full set of revenue, earnings, and P/E assumptions sits behind that fair value estimate.
Result: Fair Value of $105.86 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this depends on smooth regulatory outcomes and Arizona demand materializing as expected, since delays or overbuilding could quickly undermine the current undervalued story.
Find out about the key risks to this Pinnacle West Capital narrative.
Another Angle On Value
The analyst narrative points to Pinnacle West Capital trading about 5.7% below a fair value of $105.86, but the SWS DCF model paints a different picture. On that view, the stock at $99.83 sits above an estimated future cash flow value of $89.80, which suggests less of a clear bargain and more of a debate about which set of assumptions you trust most.
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That tension between an earnings based fair value and a cash flow based estimate is where your own conviction on growth, regulation, and capital spending really matters. It can be worth stress testing both sets of numbers before deciding how comfortable you are with today’s price relative to each framework.Look into how the SWS DCF model arrives at its fair value.PNW Discounted Cash Flow as at May 2026
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Pinnacle West Capital for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 44 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
The mixed sentiment in this article reflects that Pinnacle West Capital has both concerns and bright spots, so it makes sense to move quickly and test the numbers for yourself; a good place to start is by weighing up the 4 key rewards and 2 important warning signs
Looking for more investment ideas?
You have seen how one stock can present a mix of risks and rewards, so now is the moment to widen your watchlist and compare other opportunities with clear data.
Target resilient balance sheets by scanning companies in the solid balance sheet and fundamentals stocks screener (46 results), where financial strength takes center stage. Hunt for potential mispricing with the 44 high quality undervalued stocks, which highlights stocks combining quality fundamentals with attractive valuations. Prioritize stability and income by reviewing the 69 resilient stocks with low risk scores, which focuses on companies with lower risk scores.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include PNW.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- Barclays Raises its Price Target on Pinnacle West (PNW) to $102
May 9, 2026
Pinnacle West Capital Corporation (NYSE:PNW) is one of the
15 Best Power Generation Stocks To Buy For Data Center Demand.
On May 5, 2026, Barclays analyst Nicholas Campanella raised the firm’s price target on Pinnacle West Capital Corporation (NYSE:PNW) to $102 from $101 and maintained an Equal Weight rating following the company’s Q1 report. The analyst said Pinnacle West delivered a solid start to 2026, though the first quarter represents a relatively small portion of the company’s full-year earnings contribution.
On May 4, 2026, Pinnacle West Capital Corporation (NYSE:PNW) reported Q1 EPS of 27c, ahead of the 1c consensus estimate, while revenue came in at $1.15B compared to expectations of $1.08B. The company said results benefited from higher transmission revenues, lower operations and maintenance expenses, weather impacts, and customer growth and usage trends, partially offset by higher interest expense, income taxes, and depreciation costs. CEO Ted Geisler said Arizona experienced its warmest winter on record, with elevated temperatures continuing into spring, resulting in stronger-than-normal energy usage from retail customers during the quarter. Pinnacle West maintained its FY26 EPS outlook of $4.55-$4.75, compared to consensus estimates of $4.70.Barclays Raises its Price Target on Pinnacle West (PNW) to $102
allstars/Shutterstock.com
Ahead of earnings, Morgan Stanley analyst David Arcaro lowered the firm’s price target on Pinnacle West Capital Corporation (NYSE:PNW) to $98 from $99 and maintained an Equal Weight rating as part of a broader update on North American regulated and diversified utilities and IPPs.
Pinnacle West Capital Corporation (NYSE:PNW), through its subsidiary, provides retail and wholesale electric services in Arizona.
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- Pinnacle West: An AI Load Growth Beneficiary, But Fairly Priced (Rating Upgrade)
May 5, 2026 · seekingalpha.com
Pinnacle West (PNW) is upgraded from sell to hold as shares approach fair value after a strong technical breakout and solid Q1 results. PNW delivered Q1 GAAP EPS of $0.27 and revenue of $1.15B, beating expectations, with robust 9.4% retail sales growth driven by 14.6% C&I demand. Management reaffirmed FY 2026 EPS guidance of $4.55–$4.75 and targets 5–7% long-term EPS growth, supported by $10.4B capex through 2028.
- Pinnacle West Capital Corporation Q1 2026 Earnings Call Summary
May 4, 2026
Pinnacle West Capital Corporation Q1 2026 Earnings Call Summary - Moby
Strategic Performance and Market Dynamics
Performance was driven by strong customer growth of 2.2% and weather-normalized sales growth of 7.4%, fueled by the rapid expansion of Arizona's semiconductor and advanced manufacturing sectors. Management attributed significant quarterly earnings benefits to higher transmission revenue and record-breaking heat in March, which offset increased financing costs and depreciation. The company is utilizing machine learning and automation to enhance grid resilience and optimize asset maintenance, specifically targeting wildfire and weather risk mitigation. Strategic positioning is centered on supporting TSMC's multi-fab expansion and a growing supply chain, with 4.5 gigawatts of large-load demand already committed. Operational excellence is being maintained through high reliability and top-tier customer satisfaction rankings, with APS earning the highest national awareness score for customer programs. The company is executing a transition in its generation mix, including the Red Hawk natural gas expansion and evaluating bids for new resources to enter service between 2029 and 2031.
Strategic Outlook and Guidance Assumptions
Annual sales growth guidance is maintained at 4% to 6% for 2026, with long-term projections of 5% to 7% through 2030 based on committed industrial ramp-ups. The upcoming Integrated Resource Plan (IRP) filing will provide a 10-to-15-year framework for generation and transmission needs, incorporating organic growth and committed high-load factors. Management aims to narrow the regulatory lag to within 50 basis points of the authorized ROE by 2029 through constructive rate case outcomes and formula rate designs. The 'subscription model' for large-load customers is expected to result in filed agreements this year, shifting some of the 20-gigawatt uncommitted queue into the committed category. Capital allocation strategy prioritizes de-risking the equity plan, with $850 million in priced equity already secured to meet needs through 2028.
Structural Changes and Risk Factors
O&M expenses decreased significantly due to lower planned outage costs and a Commission-mandated reduction in energy efficiency programs. The retirement of the Cholla coal plant impacted depreciation, while management is currently studying the site for potential conversion to natural gas generation. Transmission revenue contributed 16 cents per share this quarter, reflecting a step-function increase in recovery from heightened infrastructure investments. Management explicitly stated they will not put the utility balance sheet at risk for new nuclear projects unless large customers provide financing support.
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Q&A Highlights
Sustainability of long-term sales growth and narrowing regulatory lag
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Current growth is driven by the ramp-up of extra-high load factor customers, with a 20-gigawatt uncommitted queue providing further upside. The 200-basis-point delta between EPS and rate base growth is expected to narrow as the company reduces lag and utilizes bilateral contracts for upfront funding.
Subscription model mechanics and large-load customer interest
Interest remains robust with a 20-gigawatt queue; negotiations are complex as they involve 'growth pays for growth' pricing and infrastructure financing. The initial 1.2-gigawatt offering was sized based on available capacity at Desert Sun and associated transmission infrastructure.
Potential for coal-to-gas conversion and federal permitting reform
The Cholla site is being analyzed for gas conversion, which appears increasingly affordable compared to new-build gas due to supply chain pressures. While supportive of federal permitting reform for transmission and pipelines, the company is not relying on it to execute its current infrastructure plan.
Impact of Renewable Energy Standard repeal and efficiency program changes
No impact is expected from the repeal as the utility already exceeds the original standards through market-driven solar and battery investments. Energy efficiency programs were right-sized to focus on high-value initiatives, resulting in a 1% rate decrease for customers.
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- Pinnacle West (PNW) Q1 2026 Earnings Transcript
May 4, 2026
Image source: The Motley Fool.
DATE
Monday, May 4, 2026 at 12 p.m. ET
CALL PARTICIPANTS
Chairman, President, and Chief Executive Officer — Theodore N. Geisler Executive Vice President and Chief Financial Officer — Andrew D. Cooper
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Full Conference Call Transcript
Theodore N. Geisler: Thank you, Amanda, and thank you all for joining us today. We are off to a solid start in 2026, delivering first quarter earnings that support the financial guidance we provided in February. Before Andrew reviews the quarter in more detail, I will highlight several operational, customer, and regulatory developments that underscore the momentum across our business. Arizona’s diverse economy continues to expand at a strong and sustained pace, reinforcing the state’s position as a national leader in semiconductor and advanced manufacturing. We are proud to support TSMC’s accelerated expansion in Arizona and are working closely with the company on the infrastructure needed to power their growth.
With its second fab complete, TSMC expects to begin volume production of 3-nanometer chips in the second half of next year. Construction is underway on the company’s third fabrication facility, and TSMC has also begun construction on its fourth fab and first advanced packaging facility, with those facilities expected to come online by 2029. Importantly, the momentum extends well beyond TSMC. Activity across the semiconductor supply chain continues to intensify throughout the region, with key suppliers rapidly establishing and expanding their local footprints to support accelerated production timelines. United Integrated Services Corp, Sunlit Chemicals, and Mournstera have all purchased land in North Phoenix.
At the same time, engineering firms, clean room specialists, electromechanical integrators, and equipment suppliers are increasing staffing levels and scaling operations across the Valley. These investments demonstrate strong confidence in Arizona’s economy and reinforce the sustained growth we are seeing across our service territory. Turning to operations. Our focus remains on delivering top-tier reliability, strengthening grid resilience, and investing in the infrastructure and technology needed to serve our customers safely and efficiently. Across the company, we are using automation and advanced analytics to improve decision making and execution.
For example, we are applying machine learning tools to better anticipate equipment performance, prioritize asset maintenance, identify outage restoration more accurately, and strengthen situational awareness during periods of elevated wildfire or weather risk. These capabilities are helping our teams act faster, target investments more effectively, and continue improving reliability for our customers. We continue making solid progress on our generation and transmission investment plans. Construction is now underway at our Red Hawk expansion project, which will add eight combustion turbines and approximately 400 megawatts of reliable natural gas capacity to the system. We are also advancing the Desert Sun project, where we have secured major equipment reservations and continued to progress through early development activities, including siting and permitting.
Story Continues
On resource procurement, we recently received proposals in response to the all-source RFP issued later last year, which targeted new resources beginning service between 2029 and 2031. We are evaluating those bids now and working with counterparties to determine the best-fit projects for our system and customers. We expect to make final awards later this year. As we plan for long-term growth, we are also focused on near-term summer preparedness. Palo Verde Unit 2 is in the final days of its planned refueling outage and expected to return to service soon. With all three units operating, Palo Verde will continue providing round-the-clock reliable and affordable energy to help meet our summer demand.
We are prepared to serve our customers safely, reliably, and affordably during the months ahead when they depend on us the most. We continue to strengthen our customer-centric culture with employees focused on delivering reliable service, minimizing outages, and providing a seamless experience across phone, field, and digital channels. In the first quarter, APS delivered strong results in the Escalent customer relationship model, ranking in the first or second quartile across all core KPIs. APS also ranked in the first quartile through J.D. Power and was highlighted nationally as a top performer in customer awareness and participation in products and services, earning the highest awareness score in the country for available customer programs. Lastly, our rate case remains on track.
We have completed multiple rounds of written testimony, and the hearing is scheduled to begin on May 18. We look forward to working with the Commission and intervenors in a timely and constructive manner. In summary, we are executing our plan, delivering operational excellence to our customers, investing in grid expansion to serve Arizona’s rapid growth, and improving investment recovery to reduce regulatory lag while ensuring affordability for customers. With that, I will turn the call over to Andrew.
Andrew D. Cooper: Thank you, Ted, and thanks again to everyone for joining us today. This morning, we reported our first quarter 2026 financial results. I will review those results and provide additional details on sales and financial guidance. For 2026, we reported earnings of $0.27 per share compared to a loss of $0.04 per share for 2025. Higher transmission revenue, favorable weather, higher sales and usage, and lower O&M were the primary benefits this quarter. These positives were slightly offset by increased financing costs, a smaller contribution from our Eldorado investment than last year, and higher depreciation and amortization. Transmission revenues contributed 16¢ of benefit this quarter. This reflects our continued focus on heightened transmission investments to support our growing customer base.
Expect a strong benefit in this area throughout the year, in line with our annual guidance. Weather also provided a meaningful benefit this quarter, primarily driven by the warm weather we experienced later in the quarter. Although we saw less heating load in January and February due to a mild winter, according to the National Weather Service, March was the hottest on record, with nine days at or above 100 degrees. The resulting impact was a benefit of 13¢ attributable to weather in the first quarter due to an increase in residential and commercial cooling degree days.
We continue to see a consistent ongoing influx of customers into our region, as customer growth for the quarter was again strong at 2.2%, near the high end of our annual customer growth guidance. Our weather-normalized sales growth was 9.4% for the quarter, driven by strong C&I growth of 14.6% and residential growth of 1.8%. We had a one-time adjustment to sales growth during last year’s first quarter, and if we take that into consideration, we would still have experienced strong weather-normalized sales growth at 7.4% during Q1 of this year. We are not changing our annual sales growth guidance of 4% to 6% at this point, but it is a strong start to the year.
This trend of customer and sales growth reinforces our need for investments in our system to ensure reliable service for our customers. On the expense side, O&M saw a significant decrease in the first quarter compared to last year. This was mostly driven by lower planned outage expenses and a reduction to Commission-required energy efficiency programs. We continue to have a strong focus on cost management, and we are maintaining our goal of declining O&M per megawatt-hour. Interest expense was higher this quarter compared to the first quarter of last year, driven by higher debt balances from issuances. Our year-over-year benefit from our Eldorado investment was smaller, driving a slight drag.
Finally, our depreciation and amortization expense for the quarter increased slightly as the placement of additional plant in service was partially offset by the retirement of Cholla. Turning to the balance sheet. We recently had positive conversations with all three credit rating agencies, resulting in the maintenance of our current ratings and stable outlooks. We are focused on sustaining solid ratings and metrics to the benefit of our customers as we continue to work with the Commission and stakeholders on reducing regulatory lag through our pending rate case. Our guidance for financing remains unchanged. We are pleased to announce that all of our equity funding needs for 2026 have been completed, and we are opportunistically working towards future year needs.
We now have nearly $850 million of priced equity available to us for future issuance under equity forwards, including more than $350 million priced during the first quarter. We continue to utilize a mix of debt and equity sources to maintain our balanced capital structure. We are reaffirming all other aspects of our financial guidance and look forward to reliably serving our customers as we continue executing our strategy throughout the year. This concludes our prepared remarks. I will now turn the call back over to the operator for questions.
Operator: Certainly. Everyone, at this time we will be conducting a question-and-answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from Shahriar Perruza from Wells Fargo. Your line is live.
Analyst: Good morning, everyone. It is actually Alex on for Shar. Thanks for taking our questions. So just on the long-term sales growth, that 5% to 7% you have out there through 2030, you are obviously seeing a lot of growth in your service territory and in the pipeline as well. You saw 7% growth just this past quarter. Can you talk a little bit about how sticky this outlook is? Can we see this trend continue going forward? Is there anything that you see that could potentially allow you to revisit this outlook as opportunities continue to materialize?
And then just pivoting, on the EPS and the rate base CAGR, as we look out, say, 2029 and beyond, any updated views on how we should be thinking about the delta between the two? Is that 200 basis points the right figure, or could you see those two converge over time given all the opportunities and growth that you are seeing?
Andrew D. Cooper: Good morning. As you noted, we did have sales growth this quarter that, even adjusting for the adjustment from the first quarter of last year, was almost 7.5%. That was driven by the continued ramp-up of our extra-high load factor customers, and we have a number of them that are all in different stages of their ramp. Last year, we were able to increase our long-term sales growth guidance through 2030 up to that 5% to 7%. What you saw in the first quarter here looked more like the top end of our range for the long term, relative to what we expect for this year, which is 4% to 6%.
You are seeing long-term trends begin to manifest around the diversity of customers we have. We are about to get rolling on Fab 2 at TSMC, as Ted mentioned, and we continue to see sustained customer additions to our service territory, which for the quarter were in the top half of our customer growth range. Fundamentally, that long-term runway around the diverse sales growth in the service territory is something we see continuing. We will continue to revisit because that sales growth rate is driven by the customers that are committed today—the roughly 4.5 gigawatts of customers that we have committed to.
There is a large backlog of customers in our queue, and as we continue to work the capital plan and the ability to serve those customers, we will look for opportunities to invest and see sales growth beyond our base plan. For now, we feel comfortable with the 5% to 7% long term and the 4% to 6% for this year. Regarding EPS versus rate base CAGR and the roughly 200 basis point delta, we will have to revisit all of this at the conclusion of the rate case.
Our capital investment opportunity will be informed by the ability to narrow regulatory lag, which in and of itself will help narrow that gap between what we spend and how it drops to the bottom line, as well as some potential for bilateral contracting opportunities with some of our large-load customers. Our expectation is to continue to push those customers to support some of the upfront funding, which will allow us over the course of the contract to front-end load some of the funding and reduce the need for external funding. As we continue to have better and more predictable cash flow conversion, it gives us an opportunity to fund more from retained earnings.
We will continue to look at that while also looking at the capital opportunity to reinvest in the system.
Operator: Your next question is coming from Julien Dumoulin-Smith from Jefferies. Your line is live.
Julien Patrick Dumoulin-Smith: Hey, team. Good morning. Nicely done. What a way to start the year. Maybe just to kick things off from a timing perspective: what could we see on the August 3 IRP filing, and how do you think about that refresh cycle? What kind of clues could we get to kick off the summer ahead of any broader post–rate case update? And related to timing, what are the gating items for this subscription model contract effort you are trying to get off the ground? When could contracts be signed—is that something we could see this summer? Do you think about that materializing?
Theodore N. Geisler: Appreciate the question. The IRP will be a meaningful update. The team is finalizing the analysis and the report now, and we will work with stakeholders on engaging in different review components ahead of the official filing later this summer. The IRP analysis will include our latest long-term thinking in terms of sales growth within the service territory across all three sectors: residential, small to medium-sized business, and industrial growth. Importantly, it will include all of the extra-high load factor growth that we have committed to, but it will not include anything that we have not contracted for yet, which will remain as upside.
We have done a lot of work over the past six to twelve months to analyze over the next ten to fifteen years how residential growth trends with distributed generation and energy efficiency, how the long-term ramp rates will play out for the committed 4.5 gigawatts of extra-high load factor growth, and the resources needed to support that. Within the near-term action plan window of the IRP, it will show some specific projects that have already been announced. Beyond that, it will show buckets of generation and transmission needed.
As we carry forward the capital plan—either at the conclusion of this rate case or into the beginning of next year—that capital plan should support the resource and transmission needs outlined in the IRP based on the committed growth included in the analysis. On the subscription model, we continue to be in active negotiations with counterparties on various projects. It is too early to tell how those may conclude, but as soon as they do, we would expect to be filing agreements with the Commission, and we are still on track to get those filed this year.
Julien Patrick Dumoulin-Smith: Got it. Thank you. And if I can needle a bit: APS’s rebuttal moved several mechanics closer to what the UNF guys have on their gas template. How should we think about the cadence of that 200 basis points? Is a 50 basis point ROE gap by 2029 still the goal, or is there potential to move that forward?
Theodore N. Geisler: Yes. We still believe that our rebuttal position—and our ability to continue to manage regulatory lag going forward—is consistent with our position at this point. Management’s goal is to be able to consistently earn within that 50 basis points, given there is some element of structural lag that will continue to exist. The latest thinking on design elements for formula rate, as well as assuming a constructive outcome in the rate case revenue requirement, would allow us to do so by 2029 and going forward.
Operator: Your next question is coming from Richard Sunderland from Truist Securities. Your line is live.
Richard Sunderland: Good morning. Picking up on the subscription model commentary, can you frame whether interest has shifted at all relative to expectations three to six months ago? Any flavor you can give around those conversations would be helpful, given limited insight from the outside.
Theodore N. Geisler: The interest is still robust within the service territory. Our overall queue size remains elevated, hovering just under 20 gigawatts of uncommitted demand. How much of that is duplicative projects or interest versus projects ready to execute is to be determined, but the interest in viable projects for us to contract is meeting our original expectations. These contracts are complex. They involve details around investments and execution of both transmission and generation, ensuring that the rates are carefully calculated to make sure growth pays for growth, that the financing needs are met, and that both the utility is protecting its customers for reliability and affordability and the counterparty gets what they need in terms of timing and resource adequacy.
It takes time to work through these negotiations, but they are making progress. We are pleased with how the subscription model was received by the market. We are not at the point yet of filing them with the Commission, but it is trending in that direction.
Richard Sunderland: Switching gears, about a month ago the Governor’s energy task force delivered a report. There was a lot in there, including new nuclear. What do you have an eye to out of that report—anything to highlight on the nuclear front or more broadly?
Theodore N. Geisler: We appreciated working with the Governor, several agencies within the state, and other stakeholders to create awareness of the energy needs to power Arizona’s growth and how to think about those needs at a macro level. It was a robust set of discussions culminating in a directional report that identified several key factors. One, the state plans to invest in and support new gas infrastructure to power growth reliably, showing widespread support for the gas pipeline infrastructure needed. Two, the state will continue to benefit from a diverse set of resources, anchored by around-the-clock dispatchable generation while also benefiting from our robust solar irradiance.
And longer term, the state has always been a leader in reliable and affordable nuclear generation, and both the utilities and the state believe that is a technology worth paying attention to and being open to support in the future when it makes sense from an affordability and licensing/permitting standpoint. We have said before, specific to nuclear, that we are not in a position to put the utility balance sheet at risk. To the extent we have large customers interested in seeing new nuclear and willing to help support the financing, as the operator of the largest producing nuclear plant in the country, we would be very open to those discussions at that time.
Operator: Your next question is coming from Paul Patterson from Glenrock Associates. Your line is live.
Paul Patterson: Good morning. On the prepared remarks, you mentioned how much you have taken care of in terms of equity, but you also mentioned looking for additional opportunities. Could you elaborate a little on your thinking there?
Andrew D. Cooper: Sure. We have continued to try to de-risk the equity plan. We have a three-year equity plan through 2028. Admittedly, that is the base case plan without expectations that could come from the formula rate or bilateral subscription-type agreements; it is the base of what we need with the CapEx plan we have in place today. Through various equity forward transactions, we have accumulated almost $850 million of equity to put to work. Our stated need for this year is $650 million of equity, so we have nearly another $200 million that we have achieved through our ATM program to help meet future-year needs as well.
We will continue to look at the equity needs against the rate case and our cash flow situation. For the base needs—roughly $1.0 billion to $1.2 billion of new money from 2026 through 2028—we have already begun to eat into that number by several hundred million dollars. We are trying to de-risk and do so opportunistically as we go along.
Operator: Your next question is coming from Ryan Levine from Citi. Your line is live.
Ryan Michael Levine: Good morning. In light of Commissioner Meyer’s testimony in D.C. recently, what is the thought process around converting retired coal to gas generation, and the potential for federal permitting reform to impact the company?
Theodore N. Geisler: We continuously look at when it makes sense to revisit using some of our retired generation sites. At this point, the Cholla site is the only one that would fall into that category. Analysis was done back in 2015 on the need to retire that site as a coal facility, but ever since then we have continuously done analysis to determine when it makes sense for our customers to potentially convert it to gas, use the site for new gas generation, or even other technology in the future. That analysis is ongoing. As demand rises in our service territory, natural gas continues to be an affordable resource for us.
As the cost of new gas generation has increased recently due to supply chain demands, gas conversion continues to look even more affordable. If and when it makes sense for us to convert on behalf of our customers, we will make that clear, begin those investments, and put it in our plans for the future.
Ryan Michael Levine: Regarding potential federal permitting reform to impact the company, any color there?
Theodore N. Geisler: At this point, there is nothing specific we can directly tie to where reform could benefit us. We agree with Chair Myers that the broader need for streamlining federal permitting has never been more present than now, given the significant infrastructure needs to power growing markets within our country—Arizona among the top. Whether it be transmission siting or gas pipeline infrastructure, any help driving efficiencies and expediting federal permitting will allow us to implement infrastructure quicker and serve customer demand quicker. We support opportunities to look at those reforms, but it is too early to tell in terms of any specific opportunities that will benefit our infrastructure plans.
We are not counting on changes to reform to execute our plan and we remain on track with our infrastructure investment opportunities.
Ryan Michael Levine: On the ongoing study around converting to a gas plant, is there any timeline for when that study will conclude? Would that be concurrent with the subscription negotiations targeting the end of this year?
Theodore N. Geisler: The best opportunity to continue to look at that is as we conclude our analysis leading up to this IRP filing. That will include a wholesale look at our generation mix to serve growth, and as part of that, continued renewed analysis on any potential for gas conversion or new gas generation at the Cholla site.
Operator: Your next question is coming from Anthony Crowdell from Mizuho. Your line is live.
Anthony Crowdell: Good morning, team. On Slide 18, you showed committed load and then the uncommitted load. Twenty gigawatts is uncommitted. What are the factors or timing for when we can maybe move that 20 gigawatts into the 4.5 gigawatts? Do you see a conversion through 2026 or timing of conversion?
Theodore N. Geisler: The subscription model offering we came out with last year and the negotiations currently underway with counterparties would reflect some elements of that 20 gigawatts potentially moving over to the committed customer bucket. That process is underway now. As we approach opportunities to file special rate agreements with our Commission, that is the opportunity to create more visibility into how much of that 20 gigawatts may shift over based on this initial subscription offering. As we continue to work forward in our plan for new transmission and generation infrastructure, that will give us visibility into what the next iteration of the subscription model could look like to offer back to that queue.
Our goal is to submit those contracts to the Commission for review this year, which is when we will have greater visibility. In addition, our IRP will provide our latest analysis on organic load growth—non–extra-high load factor growth inclusive of residential and small to medium-sized business—and likely provide visibility into what we are thinking beyond just the 20-gigawatt queue over the next ten to fifteen years.
Anthony Crowdell: For APS, I believe you have a large-load tariff that may reevaluate the cost to serve these large-load customers on some cadence. When you talk to potential large-load customers that may come onto your system, do they have comments or preferences? Are they agnostic to the different types of large-load tariff that exist—the APS offering versus other utilities?
Theodore N. Geisler: We have an existing extra-high load factor tariff, and as part of this rate case we have proposed updating that tariff to reflect the current supply-demand environment and ensure it is priced so that growth pays for growth. Generally, these large customers accept the responsibility of paying for the cost associated with serving their growth. Looking ahead, customers will have two options. The standard offering is to continue to take service from that XHLF tariff, recognizing it will be priced based on actual cost of service.
To the extent they want an accelerated offering through the subscription model—where they contribute to financing infrastructure or potentially help accelerate providing key equipment—we can enter into a special contract to be submitted to the Commission for review and approval. Either way, pricing—whether through tariff or subscription model—needs to pay for the entire cost of service. That is a commitment we have made to our Commission and our other customers.
Anthony Crowdell: Have they shown a bias for or against it, or are they agnostic?
Theodore N. Geisler: There is general support. We need to defend the pricing and ensure customers have visibility into it. As we engage with counterparties on incremental infrastructure needed to serve them—incremental transmission and incremental generation—these are truly new builds. There is no more capacity on the existing system to take advantage of, so it is all new construction. As a result, the price looks different than it did when you were taking benefit from legacy infrastructure already installed. It is important that we are transparent about what it takes to serve them. There is general acceptance that this is the reality of today’s operating environment and what it will take to reliably connect in the Phoenix market.
While prices are meaningfully different than years ago when there was excess grid capacity available, demand interest from our visibility has not changed at all.
Operator: Your next question is coming from Steve D’Ambrizi from RBC Capital. Your line is live.
Stephen D'Ambrisi: Thanks very much for taking my question, and congratulations on the strong start. Following up on questions about the subscription model, I believe the Phase 2 offering was initially sized at up to 1.2 gigawatts. What drove that sizing? Is it more reflective of the near-term opportunity within the 20 gigawatts, or is it a function of available capacity at Desert Sun or gas capacity? How should we think about the pace of potential incremental additions?
Theodore N. Geisler: You are correct that the initial sizing was driven by the infrastructure we had identified as being available for a subscription offering. That reflected the available generation and transmission we had visibility to in the timeframe the subscription counterparties were interested in—in large part from Desert Sun and the transmission to coincide with it. That will be a continuous evaluation. Think of it less as a fixed amount of capacity and more as a process: we evaluate how much of our organic load growth will require infrastructure for existing customers—residential and small to medium-sized business—and then how much incremental infrastructure we can build to offer above and beyond that to the subscription queue. We then contract for that availability.
When we went to the subscription queue, we started with that 1.0 to 1.2 gigawatt offering and continued conversations with counterparties on their interest—whether one counterparty or multiple. That also opens the door for other counterparties that may have access to key equipment to add additional capacity. The premise is: first, we create the opportunity to add incremental infrastructure above and beyond organic load requirements; then we offer that to the queue, engage in negotiations, finalize awarded capacity, and then repeat the process with new infrastructure opportunities we create for future availability.
Operator: Your next question is coming from Travis Miller from Morningstar. Your line is live.
Travis Miller: Hello, everyone. Thank you. Question on the transmission side: the revenue and earnings contribution for this quarter, and thinking about the year and future years—was there anything in the quarter that made this uniquely large, or is this the type of trajectory we should see again this year and then following along the upward-sloping line of transmission investment?
Andrew D. Cooper: As mentioned in the prepared remarks, our transmission investment has continued to increase to serve growing load. If you go back five years, we have doubled and then doubled again the amount we are spending annually in terms of transmission CapEx. For our system, that starts down at 69 kV, so it is a substantial amount of local-area infrastructure as well. What you are seeing—also reflected in last year’s results—is a continued step function upward in the results of the transmission investments we have been making.
It takes time for that investment to show through to the bottom line, and that is what you are beginning to see year over year as we engage in more and larger projects, and that will continue upward. It also shows the benefit of a formula rate—having gradual increases and contemporaneous recovery to reduce lag. It is also a rate that allows us to pass back wholesale revenue to our retail customers and has kept some transmission rate increases pretty stable over the years, producing the right results for customers as we continue to grow.
Travis Miller: On those transmission earnings, how weather sensitive are those? Or are those completely decoupled through the formula rate?
Andrew D. Cooper: It is trued up and intended to earn our return on those investments.
Theodore N. Geisler: Keep in mind it has a balancing account, and a meaningful amount of that transmission revenue is also paid by wholesale customers, which offsets the cost to retail customers. It has an annual true-up. The transmission driver is really more a reflection of our growing capital investments within the transmission system to support reliability and growth than it is weather or any other factor.
Andrew D. Cooper: What you are seeing right now is the impact of the rates we put into effect in the middle of last year, and there will be new rates that go into effect in 2026. The quarter is consistent with the full-year guidance we gave for the transmission segment.
Travis Miller: One high-level on the renewable energy standard repeal—any impact? Your thoughts on that process?
Theodore N. Geisler: No impact expected. The Commission took a logical approach: the utility is already exceeding the original goals set forth in that renewable energy standard, driven by general market interest and demand, as well as the amount of growth that has spurred significant investment in utility-scale solar and battery storage projects across the service territory to date. Having an outdated policy standard that we are already exceeding did not make much sense. From here, we view it to be market driven. On updates to the demand-side management energy efficiency standard, this was an opportunity for the Commission to review which programs have the greatest value and impact for customers and which have less.
We think they appropriately right-sized programs to focus on those with the greatest value while also passing on roughly a 1% rate decrease to all customers. It preserves the value of these programs while creating an affordability opportunity.
Operator: That completes our Q&A session. Everyone, this concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
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Pinnacle West (PNW) Q1 2026 Earnings Transcript was originally published by The Motley Fool
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- Pinnacle West Capital Q1 Earnings Call Highlights
May 4, 2026
Pinnacle West Capital logo
Key Points
Q1 EPS was $0.27 versus a loss of $0.04 a year ago, driven mainly by higher transmission revenue (about $0.16), unusually hot March weather (about $0.13), stronger sales and lower O&M, partly offset by higher interest expense and depreciation. Management highlighted strong Arizona growth tied to semiconductor investment—TSMC is expanding with multiple fabs—and a large customer backlog (roughly 4,500 MW committed and an uncommitted queue just under 20 GW), using a “subscription model” to align big-load contracts with transmission and generation buildout. Regulatory and financing updates: a rate-case hearing begins May 18 and the IRP is due Aug 3 (will include committed but not uncontracted projects), while Pinnacle West says it has completed 2026 equity needs with nearly $850 million of priced equity available and credit ratings/ outlooks stable. Interested in Pinnacle West Capital Corporation? Here are five stocks we like better.
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Pinnacle West Capital (NYSE:PNW) opened 2026 with first-quarter results that management said were in line with the financial guidance issued in February, supported by higher transmission revenue, weather-driven demand, and continued customer growth in Arizona.
Management points to Arizona growth and large-load momentum
Chairman, President, and CEO Ted Geisler said Arizona’s economy continues to expand, led by semiconductor and advanced manufacturing activity. Geisler highlighted Taiwan Semiconductor Manufacturing Co.’s continued buildout in the state, noting that with its second fab complete, TSMC “expects to begin volume production of 3-nanometer chips in the second half of next year.” He added that construction is underway on TSMC’s third fabrication facility, and the company has begun construction on a fourth fab and an advanced packaging facility expected to come online by 2029.
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Geisler also said the broader semiconductor supply chain is expanding locally, pointing to United Integrated Services Corp, Sunlit Chemical, and Mornstair purchasing land in North Phoenix, alongside hiring and capacity increases by engineering firms and specialized suppliers. He said those investments “demonstrate strong confidence in Arizona’s economy and reinforce the sustained growth we are seeing across our service territory.”
Grid modernization, generation buildout, and summer readiness
On operations, Geisler said the company continues to emphasize reliability, grid resilience, and infrastructure investment, including the use of automation and advanced analytics. He said APS is applying machine learning tools to anticipate equipment performance, prioritize asset maintenance, and improve outage restoration estimates, including during periods of elevated wildfire or weather risk.
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Geisler also provided updates on major projects:
Redhawk expansion: Construction is underway on the project, which is expected to add eight combustion turbines and about 400 MW of natural gas capacity. Desert Sun: The company has “secured major equipment reservations” and is advancing early development activities including siting and permitting. All-source RFP: The utility has received proposals from an all-source request for proposals targeting resources entering service between 2029 and 2031, and is evaluating bids with final awards expected later this year.
Looking to near-term demand, Geisler said Palo Verde Unit 2 was in the final days of a planned refueling outage and is expected to return to service soon. He added that with all three units operating, Palo Verde will help meet summer demand with “round-the-clock, reliable, and affordable energy.”
First-quarter EPS improves on transmission revenue, weather, and lower O&M
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CFO Andrew Cooper reported first-quarter 2026 earnings of $0.27 per share, compared with a loss of $0.04 per share in the first quarter of 2025. Cooper said the quarter benefited primarily from higher transmission revenue, favorable weather, higher sales and usage, and lower operations and maintenance expense, partially offset by increased financing costs, a smaller contribution from the El Dorado investment, and higher depreciation and amortization.
Cooper said transmission revenue contributed $0.16 of benefit during the quarter, reflecting increased transmission investment “to support our growing customer base.” He said the company expects transmission to remain a strong contributor throughout the year in line with annual guidance.
Weather also lifted results. Cooper said while heating load was lower early in the quarter due to mild winter conditions, March was unusually hot. Citing the National Weather Service, he said March was the hottest on record, with nine days at or above 100 degrees. Cooper quantified the weather impact as a $0.13 benefit attributable to increased cooling degree days, which raised residential and commercial demand.
On the expense side, Cooper said O&M declined versus last year, largely due to lower planned outage expenses and a reduction in commission-required energy efficiency programs. He added the company remains focused on “declining O&M per megawatt-hour.” Meanwhile, interest expense rose year over year due to higher debt balances, and depreciation and amortization increased slightly as additional plant was placed in service, partially offset by the retirement of Cholla.
Sales growth, customer additions, and the “subscription model” for large loads
Cooper said customer growth in the quarter was 2.2%, near the high end of annual customer growth guidance. Weather-normalized sales growth was 9.4% for the quarter, driven by commercial and industrial growth of 14.6% and residential growth of 1.8%. Cooper noted a one-time adjustment affected the comparison to last year; adjusting for that, he said weather-normalized sales growth would still have been 7.4%.
Despite the strong start, Cooper said the company is not changing its annual sales growth guidance of 4% to 6% at this time.
During the Q&A, Cooper discussed the company’s longer-term sales growth outlook through 2030 and said the guidance reflects customers already committed today, which he characterized as roughly 4,500 megawatts. He also said there is “a large backlog of customers in our queue,” and that the company will continue to evaluate opportunities to invest and potentially grow beyond the base plan as it executes its capital program.
Management repeatedly referenced ongoing efforts around “subscription model” contracts—special agreements designed to serve large customers while ensuring “growth pays for growth.” Responding to questions about demand, management said the company’s uncommitted queue remains “just under 20 gigawatts,” while acknowledging the mix may include duplicative or early-stage projects. The company said negotiations are active but complex, involving transmission and generation buildout, timing, financing, and rate design, and it expects to file agreements with the Arizona Corporation Commission this year once concluded.
Asked about the initial size of the subscription offering (referenced as roughly 1.0 to 1.2 gigawatts), management said the sizing was driven by the generation and transmission infrastructure it could identify and align to customer timeframes, including Desert Sun and associated transmission, and that the offering would be revisited as infrastructure opportunities evolve.
Regulatory items: rate case schedule, IRP timing, and policy changes
Geisler said the company’s rate case remains on track, with multiple rounds of written testimony completed and a hearing scheduled to begin May 18.
Management also addressed timing for its next Integrated Resource Plan filing, referencing an August 3 deadline. The company said the IRP will incorporate updated long-term views of sales growth across customer segments and will include committed high-load-factor growth, but will not include uncontracted projects in the queue, which it described as upside. Management said the IRP will outline specific near-term projects already announced and broader future “buckets” of generation and transmission needs.
On state-level policy, management said the Arizona Corporation Commission’s repeal of the Renewable Energy Standard is not expected to have an impact, noting APS is already exceeding the original renewable goals and that resource additions are increasingly market-driven. Management also said the commission’s review of demand-side management and energy efficiency programs “appropriately right-sized” offerings and, as described on the call, resulted in “a roughly 1% rate decrease to all customers.”
Balance sheet and financing: equity needs for 2026 completed
Cooper said the company has had positive discussions with all three credit rating agencies, resulting in maintained ratings and stable outlooks. He added that the company’s financing guidance is unchanged, and that it has completed all of its equity funding needs for 2026.
Cooper said Pinnacle West now has nearly $850 million of priced equity available for future issuance under equity forwards, including more than $350 million priced during the first quarter. He said the company continues to use a mix of debt and equity to maintain a balanced capital structure, and plans to revisit its capital and financing plans at the conclusion of the rate case.
About Pinnacle West Capital (NYSE:PNW)
Pinnacle West Capital Corporation is a publicly traded utility holding company headquartered in Phoenix, Arizona. Through its principal subsidiary, Arizona Public Service Company (APS), Pinnacle West generates, transmits and distributes electricity to more than one million residential, commercial and industrial customers across central and southern Arizona. The company's regulated operations focus on delivering safe, reliable power while meeting evolving environmental standards.
The company's diversified generation portfolio includes natural gas–fired plants, the nuclear-powered Palo Verde Generating Station—the largest nuclear facility in the United States by net output—plus growing investments in solar and battery storage projects.
The article "Pinnacle West Capital Q1 Earnings Call Highlights" was originally published by MarketBeat.
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- Pinnacle West Q1 Earnings Beat Estimates, Revenues Increase Y/Y
May 4, 2026
Pinnacle West Capital Corporation PNW reported first-quarter 2026 earnings of 27 cents per share, which beat the Zacks Consensus Estimate of a loss of three cents per share by a whopping 1000%. The bottom line improved substantially from a loss of four cents reported in the year-ago quarter.
Total Revenues of PNW
Sales for the quarter totaled $1.15 billion, which surpassed the Zacks Consensus Estimate of $1.08 billion by 6.48%. The top line increased 11.36% from $1.03 billion recorded in the year-ago quarter.
Pinnacle West Capital Corporation Price, Consensus and EPS Surprise
Pinnacle West Capital Corporation price-consensus-eps-surprise-chart | Pinnacle West Capital Corporation Quote
PNW’s Operational Highlights
Total operating expenses were $1.02 billion, up 4.45% year over year, due to higher fuel and purchased power, as well as other expenses.
Operating income totaled $131.2 million, up 129.2% from $57.2 million recorded in the year-ago quarter.
Total interest expenses were $125.8 million, up 19.84% from $104.9 million reported in the prior-year period.
PNW’s Financial Highlights
As of March 31, 2026, cash and cash equivalents totaled $6.41 million compared with $6.60 million as of Dec. 31, 2025.
As of March 31, 2026, long-term debt-less current maturities amounted to $9.80 billion compared with $9.21 billion as of Dec. 31, 2025.
Net cash flow provided by operating activities in the first quarter of 2026 totaled $235.3 million compared with $401.9 million in the year-ago period.
PNW’s Guidance
The company continues to expect its 2026 consolidated earnings in the range of $4.55-$4.75 per share and projects 5-7% long-term EPS growth from the 2024 earnings base. The Zacks Consensus Estimate for the same is pegged at $4.70, higher than the midpoint of the company’s guided range.
The company projects its 2026 revenues in the range of $5.56-$5.66 billion.
During 2026, management projects its retail customers to increase 1.5-2.5%. Retail electricity sales growth of 4-6%, driven partly by new large manufacturing facilities and multiple large data centers, is expected to contribute 3-5% to sales growth.
Pinnacle West plans to invest $2.60 billion in 2026 and $7.95 billion in the 2026-2028 period to further strengthen its operations.
PNW’s Zacks Rank
Pinnacle West currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Utility Releases
WEC Energy Group WEC is scheduled to report first-quarter results on May 5. The Zacks Consensus Estimate for first-quarter EPS is pinned at $2.33, which implies a year-over-year increase of 2.64%.
The Zacks Consensus Estimate for first-quarter sales is pinned at $3.21 billion, which suggests year-over-year growth of 1.91%.
NiSource NI is scheduled to report first-quarter results on May 6. The Zacks Consensus Estimate for first-quarter EPS is pinned at $1.06, which implies a year-over-year increase of 8.16%.
The Zacks Consensus Estimate for first-quarter sales is pinned at $2.43 billion, which suggests year-over-year growth of 12.01%.
PPL Corporation PPL is scheduled to report first-quarter results on May 8. The Zacks Consensus Estimate for first-quarter EPS is pinned at 61 cents, which implies a year-over-year increase of 1.67%.
The Zacks Consensus Estimate for first-quarter sales is pinned at $2.62 billion, which suggests year-over-year growth of 4.65%.
Story Continues
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NiSource, Inc (NI) : Free Stock Analysis Report
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- PAM vs. PNW: Which Stock Should Value Investors Buy Now?
May 4, 2026
Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Pampa Energia (PAM) and Pinnacle West (PNW). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Pampa Energia is sporting a Zacks Rank of #1 (Strong Buy), while Pinnacle West has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PAM has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PAM currently has a forward P/E ratio of 9.02, while PNW has a forward P/E of 22.01. We also note that PAM has a PEG ratio of 3.09. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PNW currently has a PEG ratio of 3.79.
Another notable valuation metric for PAM is its P/B ratio of 1.2. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PNW has a P/B of 1.75.
These metrics, and several others, help PAM earn a Value grade of B, while PNW has been given a Value grade of C.
PAM has seen stronger estimate revision activity and sports more attractive valuation metrics than PNW, so it seems like value investors will conclude that PAM is the superior option right now.
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- Pinnacle West Capital Corporation (PNW) Q1 2026 Earnings Call Transcript
May 4, 2026 · seekingalpha.com
Pinnacle West Capital Corporation (PNW) Q1 2026 Earnings Call Transcript
- Pinnacle West Q1 Earnings Beat Estimates, Revenues Increase Y/Y
May 4, 2026 · zacks.com
PNW beats Q1 earnings estimates as revenues rise 11% year over year and the company reaffirms its 2026 earnings outlook.
