Pinnacle West Capital CorporationPNW
NYSE • Utilities
$103.59
P/E
20.49
PEG
34.15
FCF Yield
0.3%
Rev Growth YoY
+3.0% YoY
Gross Margin
41.6%
Health Score
5/10
D/E Ratio
1.50
Confidence
MEDIUM
Business Snapshot
Pinnacle West Capital Corporation is an Arizona-based regulated electric utility holding company, operating primarily through its subsidiary Arizona Public Service (APS), which provides electricity to approximately 1.4 million customers across Arizona. As a regulated utility, its revenues and returns are largely determined by state regulatory decisions rather than open-market competition. With a market capitalisation of $12.54B, PNW sits firmly in the large-cap tier.
Financial Health
Score: 5/10 Pinnacle West's net margin of 11.6% is modest for a regulated utility, where capital-intensive operations compress profitability. The balance sheet carries a debt-to-equity ratio of 1.5x, which is elevated but not atypical for utilities that regularly issue debt to fund infrastructure — it nonetheless warrants monitoring...
Risk Assessment
- VALUATION DISTORTION: PEG ratio of 34.15x signals the stock is sharply overpriced relative to its 0.6% earnings growth rate, despite a below-average P/E.
- CASH FLOW QUALITY: Free cash flow of $42.05M against a $12.54B market cap produces an FCF yield of only 0.3%, leaving little room to self-fund dividends or capital expenditure.
- DEBT LOAD: Debt/equity of 1.5x, combined with a current ratio of 0.54x (below 1.0x), indicates the company has more short-term liabilities than assets to cover them.
- ANALYST SENTIMENT: Only 32% of analysts rate PNW a buy, with 68% on hold and a sell consensus — an unusual degree of Wall Street caution for a large-cap utility.
- EARNINGS QUALITY: PNW beat earnings estimates in only 2 of the last 4 quarters, suggesting execution consistency is not a reliable strength.
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**Score: 5/10** Pinnacle West's net margin of 11.6% is modest for a regulated utility, where capital-intensive operations compress profitability. The balance sheet carries a debt-to-equity ratio of 1.5x, which is elevated but not atypical for utilities that regularly issue debt to fund infrastructure — it nonetheless warrants monitoring. Free cash flow is positive but thin at $42.05M on $5.34B in revenue, yielding a meagre FCF yield of just 0.3%, which limits financial flexibility and raises questions about dividend sustainability from organic cash generation alone. ---
- **VALUATION DISTORTION:** PEG ratio of 34.15x signals the stock is sharply overpriced relative to its 0.6% earnings growth rate, despite a below-average P/E. - **CASH FLOW QUALITY:** Free cash flow of $42.05M against a $12.54B market cap produces an FCF yield of only 0.3%, leaving little room to self-fund dividends or capital expenditure. - **DEBT LOAD:** Debt/equity of 1.5x, combined with a current ratio of 0.54x (below 1.0x), indicates the company has more short-term liabilities than assets to cover them. - **ANALYST SENTIMENT:** Only 32% of analysts rate PNW a buy, with 68% on hold and a sell consensus — an unusual degree of Wall Street caution for a large-cap utility. - **EARNINGS QUALITY:** PNW beat earnings estimates in only 2 of the last 4 quarters, suggesting execution consistency is not a reliable strength. ---
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