On Tuesday, Mizuho Securities exhibited confidence in Pinnacle West Capital (NYSE:PNW), adjusting the company's price target to $98.00, a significant rise from the previous figure of $75.00. The firm retains an Outperform rating on the utility company's stock. The adjustment comes as the analyst fine-tunes expectations for the 2024/2025 earnings per share (EPS), taking into account the latest operational results and anticipating forthcoming guidance.
The analyst noted that despite some immediate challenges to EPS growth, which are already factored into the current stock price, the long-term prospects for Pinnacle West Capital appear promising. This optimism is partly based on expected favorable regulatory outcomes, including those from the lag-reduction docket and a subsequent rate case, which are anticipated to bolster the stock in the next one to two years.
The revised EPS estimates for 2024 and 2025 reflect a meticulous update to align with current market conditions and multiples. The analyst emphasized that the updated price target and reiterated Outperform rating are in response to these adjusted financial forecasts.
Pinnacle West Capital, known for providing electricity services through its subsidiary, is awaiting the release of its third-quarter earnings call in 2024, which is expected to provide further clarity on the company's financial trajectory and strategic initiatives.
In other recent news, Pinnacle West Capital Corporation (NYSE:PNW) has announced a 1.7% increase in its quarterly dividend, setting the new annual dividend at $3.58 per share. The company has also reported growth in its 2024 second quarter earnings, thanks to an expanding customer base and favorable weather conditions. However, it forecasts a lower range of sales growth for the year.
In addition, Arizona Public Service Company, a subsidiary of Pinnacle West, has been awarded two grants totaling $70 million from the U.S. Department of Energy's Grid Deployment Office. These grants will fund projects enhancing grid resilience and wildfire safety, and the construction of new smart grid technology projects.
Mizuho maintains a positive outlook on Pinnacle West, reaffirming an Outperform rating. This confidence stems from recent meetings with Pinnacle West's CEO Jeffrey Guldner and CFO Andrew Cooper, who expressed optimism about the company's regulatory environment and the potential for a favorable decision on the regulatory lag docket by the end of 2024.
InvestingPro Insights
Pinnacle West Capital's recent performance and financial metrics align with Mizuho Securities' optimistic outlook. According to InvestingPro data, the company's revenue growth of 7.57% over the last twelve months and a robust 16.7% quarterly growth in Q2 2024 underscore its solid operational performance. This growth trajectory supports the analyst's positive view on the company's long-term prospects.
InvestingPro Tips reveal that Pinnacle West has raised its dividend for 13 consecutive years and has maintained dividend payments for 32 consecutive years. This consistent dividend policy aligns with the utility sector's reputation for stable income generation, which could be attractive to investors seeking reliable returns. The current dividend yield stands at 4.06%, offering a competitive income stream in the current market environment.
Additionally, the company is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.31 as of Q2 2024. This suggests that the stock may be undervalued considering its growth prospects, potentially supporting Mizuho's increased price target.
For investors seeking more comprehensive analysis, InvestingPro offers 10 additional tips for Pinnacle West Capital, providing a deeper understanding of the company's financial health and market position.
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