Pinnacle West Capital Corp (PNW) stock analysis

P/E above its 5-year median

Pinnacle West Capital's P/E of 20.7 is above its own 5-year median of 17.6.

P/E below the industry

Pinnacle West Capital's P/E of 20.7 is below the Electric Services median of 20.9.

EV/EBITDA above its 5-year median

Pinnacle West Capital's EV/EBITDA of 11.5 is above its 5-year median of 10.5.

P/B below the industry

Pinnacle West Capital's price-to-book of 1.86 is below the Electric Services median of 2.02.

Trading above fair value

The share price of $107.91 is above our fair value estimate of $97.85.

Margin of safety under 20%

The price is 10.3% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 7.3% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 5.8% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew 5.7% over the last twelve months; the Electric Services median is 7.8%.

Guidance issued

The latest outlook (2026 consolidated earnings guidance, Nov 3, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin slipping

Gross margin was 62.7% over the last twelve months, against 64.1% a year earlier.

Return on equity

Needs positive equity and five years of results.

Return on capital under 10%

Return on invested capital was 5.1%, below the 10% that usually covers the cost of capital.

Return on equity against the industry

Needs positive equity.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin against its history

Needs five years of revenue and net income.

Net margin against the industry

Needs revenue and net income.

High debt

Debt is 162% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 115% five years ago to 162%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 15.6% of total debt; we look for at least 20%.

Interest not well covered

Operating income covers interest expense 2.5 times; we look for at least 5.

Short-term assets don't cover short-term debts

Current assets are 0.59 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 0.71; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Pinnacle West Capital paid dividends worth 2.5% of the share price over the last twelve months.

Yield below Treasuries

The 2.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Pinnacle West Capital yields 2.5%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.