Pinnacle West CapitalPNW

Morningstar Rating

Stock Research and Analysis

by Morningstar Equity Analysts

Demand for electricity in Pinnacle West's service territory has historically been hot, but we're cool toward this firm's prospects. We would require a wider margin of safety to invest in Pinnacle West than we would for other regulated utilities operating Read more

Bulls Say

New solar-generation facilities offer modest potential for earnings growth.

Pinnacle West's service territory has good long-term growth prospects.

The termination of speculative trading has created a more stable and predictable earnings stream. Read more

Bears Say

A challenging regulatory environment has prevented the firm from raising rates fast enough to recover capital outlays and produce a healthy return to investors.

Pinnacle West purchases and resells more than half of its electricity. Not only is purchased power resold at cost, but the firm may not be able to pass through this cost right away, creating cost-recovery lags.

A tighter credit environment and a general slowdown in real estate have harmed SunCor, which has turned unprofitable.

Pinnacle West will be forced to tap external financing to fund its planned capital investments and dividend payouts. Read more

Strategy

The regulated utility business will remain the core of Pinnacle West's operations. Speculative trading and marketing activities, which generally have been unprofitable for the firm, have been eliminated Read more

Management

Chairman and CEO William Post, who had been with the firm since 1973, retired on April 30, 2009. Former COO Donald Brandt has taken his place. Brandt joined Pinnacle West in 2002 after serving as CFO of Ameren AEE, a St. Louis-based energy services Read more

Profile

Pinnacle West Capital is a holding company for an electric utility, a real estate developer, and a number of smaller firms engaged in energy consulting and energy-related Read more

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