Pinnacle West Capital’s 3Q earnings per share increased by 10.8% to $3.07 year-on-year and surpassed analysts’ expectations of $2.98. The hotter-than-normal weather conditions in Arizona boosted energy demand and supported its bottom line. However, shares of the electricity services provider fell 1% on Friday as its 3Q sales fell short of Wall Street projections.
Pinnacle West’s (PNW) 3Q revenues increased 5.4% to $1.25 billion but came slightly below Street estimates of $1.26 billion.
The company stated that “Record heat contributed to the hottest summer on record in Arizona. As a result, APS (Arizona Public Service) customers used more energy to cool their homes and businesses than under normal weather conditions. The resulting increase in retail sales – taken together with 2.3% customer growth – led to stronger third-quarter financial results for Pinnacle West Capital.” (See PNW stock analysis on TipRanks).
Buoyed by strong bottom-line performance, Pinnacle West raised its full-year 2020 earnings guidance range to $4.95-$5.15 per share from $4.75-$4.95 per share forecasted earlier. Wall Street analysts are projecting earnings of $4.98 per share in 2020.
On Oct. 12, Merrill Lynch analyst Julien Dumoulin Smith downgraded the stock to Sell from Hold citing the stock’s “sharp rally” relative to its peer group following the ACC (Austin Community College) staff recommendation related to a pending rate case. Smith kept his price target unchanged at $78 (4.4% downside potential).
Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 4 Holds, 2 Buys and 1 Sell. With shares down 8.6% year-to-date, the average price target of $83.71 implies a moderate upside potential of about 2.6% to current levels.
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