PNW
Pinnacle West Capital Corporation$100.43
Sell
Target $74.67
Report: Mar 07, 2026Utilities • Regulated Electric • Asset-Based OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$100.43-25.6%
Rec: SellConviction: Medium
Entry Target
N/A
N/A
Fair Value
$74.67
(26% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$103.97
52 Week Low$85.32
Avg. 3 Month Volume1.32M
Efficiency
LTM Gross Margin37.2%
LTM EBITDA Margin39.6%
LTM EBIT Margin21.4%
LTM Operating Margin20.0%
LTM ROA2.1%
LTM ROE7.4%
LTM ROIC3.0%
LTM ROCE4.5%
Capital Structure
Market Cap (MM)$12.2B
Enterprise Value (MM)$24.6B
Shares Outstanding120.01M
Total Debt (MM)$12.38B
Cash & Equivalents (MM)$4.14M
LTM Net Debt (MM)$12.38B
LTM Net Debt/EBITDA5.9x
Growth
TTM Rev. Growth4.2%
Last 3-Yr Rev. CAGR7.3%
Last 3-Yr EBITDA CAGR9.0%
Last 3-Yr EPS CAGR6.5%
Valuation
Street Target Price$99.22
LTM EV/Revenue4.6x
LTM EV/Gross Profit12.4x
LTM EV/EBIT21.4x
LTM EV/EBITDA11.6x
LTM P/E19.8x
LTM EV/FCF-47.9x
LTM P/FCF-23.7x
LTM P/TB0.4x
LTM P/B1.4x
Dividend Yield3.6%
Payout Ratio70.2%
Executive SummarySituation: Current price is $100.43 versus fair value $74.67 (-25.6% expected return), and valuation confidence is stable. Debate: Bull case depends on Formula Rate Filing and Regulatory Approval Approval of the formula rate filing would reduce regulatory lag and allow for more timely recovery of capital investments, potentially stabilizing the 20% operating margin. Bear case centers on Interest Rate Sensitivity and Debt Burden As an Asset-Based Operator with $12.4 billion in debt, rising interest rates directly impair the thesis by increasing the $422 million interest expense, further depressing the already low 1.6% ROIC. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Arizona's status as a premier hub for semiconductors (TSMC) and data centers provides a multi-decade demand tailwind; the regulated utility model offers a 3.6% dividend yield and stable cash flows from a growing customer base.
Bear Case
ROIC of 1.6% is significantly below the 10% cost of capital, making every dollar of growth reinvestment value-destructive; net leverage of 5.9x and negative free cash flow of $513 million limit financial flexibility and increase solvency risk.
Key Catalysts
Mid-Term (6-18 months)Impact: High
Formula Rate Filing and Regulatory Approval Approval of the formula rate filing would reduce regulatory lag and allow for more timely recove...
Near-Term (0-6 months)Impact: Moderate
Subscription Model Activation for Uncommitted Load The formal activation of a subscription model for the 10-20 GW uncommitted load queue wou...
Long-Term (18+ months)Impact: Moderate
Pinnacle West is relevant for analysis now because the stock is trading near all-time highs on AI-related growth optimism, while its underly...
Primary Risks
Concern: High
Interest Rate Sensitivity and Debt Burden As an Asset-Based Operator with $12.4 billion in debt, rising interest rates directly impair the t...
Concern: Medium
Regulatory Lag and Rate Case Denial If the ACC denies or delays the formula rate filing, the company will continue to fund expensive infrast...
Concern: Medium
The stewardship verdict is adequate for operational reliability but poor for value creation. The leadership team is successfully keeping the...
Recent Activity
2022-02-25SEC Filing (8-K)
+6.84%Pinnacle West reports 2021 full-year and fourth-quarter financial results
2021-10-07Analyst Target
-8.07%Firm: Guggenheim Analyst: Shahriar Pourreza Price Target: $58.00 Price When Posted: $66.50 Implied Downside: -12.8%
Valuation Table
8.2/10Decision Grade
Scenario Range
$0
Bear
$75
Base
$115
Bull
$100