Are you paying attention to the shares of Pinnacle West (PNW)? The stock has been in a steady uptrend with shares rising 8.4% over the last month. The stock made a 52-week record of $80.6 during the last session. Pinnacle West gained 12.6% over the previous year, compared to the 0.7% move for Zacks Utilities and the 0.5% return of Zacks Utility-Electric Power.
What is driving the outperformance?
The stock has a strong track record of positive surprises in earnings. In fact, it has not missed our earnings consensus estimate for any of its last four quarters. Pinnacle West reported an EPS of $2.88 in its November 3rd 2022 earnings report, compared to a consensus estimate of $2.62.
Pinnacle West expects to report earnings of $4.09 per share on revenues of $4.02 billion for the current fiscal year. This is a -25.23% increase in EPS for a 5.74% increase in revenues. The company expects to earn $4.22 per diluted share on $4.24 trillion in revenue for the next fiscal year. This is an increase of 3.18% and 5.4% respectively, year-overyear.
Metrics for Valuation
Pinnacle West might be at a 52 week high, but what does the future hold for this stock? To determine if Pinnacle West is due for a pullback, it is important to look at valuation metrics.
The Zacks Style Scores provide investors an additional method to sort stocks beyond the Zacks Rank. These styles are represented as grades that range from A through F in the Value, Growth, or Momentum categories, with a combined VGM Score. The style scores can be a useful tool to help investors choose Zacks stocks that best suit their investment style.
Pinnacle West’s Value Score is B. Pinnacle West’s Momentum and Growth Scores are D and C, respectively. This gives the stock a VGM Score score of B.
According to its value breakdown, the stock currently trades for 19.4X current fiscal-year EPS estimates. This premium is significantly higher than the industry average of 18.7X. Current stock price is 6.5X, compared with its peer group average of 8.5X. However, this isn’t enough for the company to be in the top 10% of all stocks that we cover from a valuation perspective.
The stock’s Zacks Rank is also important as it supersedes any fashion trend. Pinnacle West currently holds a Zacks Rank #2 (Buy), thanks to growing earnings estimates.
Pinnacle West appears to meet the requirements of our Zacks Rank 1 (Strong Buy), 2 (Buy), and 3 (Strong Sell) ratings. Pinnacle West shares might have potential over the next few months.
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