Pinnacle West Capital Corporation (PNW) is a regulated electric utility holding company headquartered in Phoenix, Arizona. Valued at $10.5 billion by market cap, it operates primarily through its subsidiary Arizona Public Service (APS), which generates, transmits, and distributes electricity to about 1.4 million customers. Companies worth $10 billion or more are generally described as “large-cap stocks,” and PNW perfectly fits that description, with its market cap exceeding this mark, underscoring its si ...

Core Viewpoint - The comparison between Pinnacle West (PNW) and Avista Corporation (AVA) highlights PNW's potential for faster growth with greater risk, while AVA offers greater stability but slower growth [1]. Group 1 - Pinnacle West is positioned for potentially faster growth compared to Avista Corporation [1]. - Avista Corporation is characterized by greater stability but is expected to experience slower growth [1].

Core Viewpoint - Pinnacle West Capital Corporation (NYSE:PNW) is recognized as one of the best utility stocks for dividends in 2026, indicating strong investor interest and potential for income generation [1]. Financial Performance - For Q4 2025, Pinnacle West reported earnings of $0.13 per share, exceeding estimates by $0.08, while revenue was $1.13 billion, falling short of forecasts by approximately $40 million [3]. - The company achieved full-year earnings of $5.05 per share for 2025, which is within the upper half of its updated guidance range [3]. - Customer growth for the year was recorded at 2.4%, also at the high end of guidance [3]. Future Guidance - Pinnacle West is targeting an EPS range of $4.55 to $4.75 for the full year 2026 [4]. - The long-term sales growth guidance remains at 5% to 7% through 2030, indicating a stable growth outlook [4]. Analyst Ratings - Barclays has raised its price target for Pinnacle West from $90 to $97 while maintaining an 'Equal Weight' rating on the shares [2][7].

Core Insights - The company reported record levels of demand in 2025, achieving a system peak of 8,648 megawatts, which is over 400 MW higher than the previous year [2] - Management emphasized improvements in customer satisfaction and digital engagement, with APS ranking in the top quartile for residential satisfaction and first quartile in digital experience [1][2] - The company is focused on disciplined execution of grid expansion plans and maintaining safety as a top priority, especially during extreme weather conditions [2] Financial Performance - For Q4 2025, the company reported earnings per share (EPS) of $0.13, compared to a loss of $0.06 in Q4 2024, and a full-year EPS of $5.05, down from $5.24 in 2024 [4][10] - Weather-normalized sales growth was 6.8% in Q4 and 5% for the full year, with residential growth at 2% and commercial and industrial growth at 7.5% [11] - The company reiterated its 2026 EPS guidance of $4.55 to $4.75 and long-term sales growth expectations of 5% to 7% through 2030 [15] Capital and Regulatory Plans - APS completed over 400 MW of owned resources ahead of schedule and is pursuing up to 2 GW of additional gas capacity by 2030 [3][5] - The company plans to file an updated 15-year integrated resource plan (IRP) mid-year, reflecting committed customer demand and resource needs [6][8] - A rate case is scheduled for hearings in May, with management emphasizing collaboration with regulators to reduce regulatory lag [16][19] Infrastructure and Growth - The company added more than 34,000 new meters for the second consecutive year, marking the highest level of customer additions in 20 years [4][11] - Management is developing a pipeline of generation and transmission projects to support large-load customers and is open to settlements regarding regulatory matters [9][17] - The company is monitoring the expansion of the Transwestern Desert Southwest Pipeline to meet strong regional demand [5]

Achieved 2025 earnings of $5.05 per share, landing in the upper half of guidance despite a $0.71 year-over-year headwind from milder weather compared to the record heat of 2024. Capitalized on Arizona's industrial expansion, specifically citing TSMC's multi-fab development and a 900-acre land acquisition as primary drivers for infrastructure requirements. Managed robust 5% weather-normalized sales growth in 2025, fueled by a 7.5% increase in commercial and industrial (C&I) demand and the highest resid ...

Core Viewpoint - Pinnacle West reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, and showing a significant improvement from a loss of $0.06 per share a year ago, resulting in an earnings surprise of +147.62% [1] Financial Performance - The company posted revenues of $1.13 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.47%, and showing an increase from year-ago revenues of $1.1 billion [2] - Over the last four quarters, Pinnacle West has exceeded consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance - Pinnacle West shares have increased by approximately 12.8% since the beginning of the year, compared to a gain of 0.7% for the S&P 500 [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's future price movements, with current consensus EPS estimates for the upcoming quarter at -$0.03 on revenues of $1.06 billion, and $4.69 on revenues of $5.62 billion for the current fiscal year [4][7] - The estimate revisions trend for Pinnacle West was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Utility - Electric Power industry, to which Pinnacle West belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Data and Key Metrics Changes - In Q4 2025, the company earned $0.13 per share, compared to a loss of $0.06 in Q4 2024, reflecting strong operational execution and cost management [12] - For the full year 2025, earnings were $5.05 per share, down from $5.24 per share in 2024, primarily due to weather impacts, with a $0.71 drag from weather normalization [13] - Weather-normalized sales growth for Q4 was 6.8%, contributing to a full-year growth of 5%, including 2% residential growth and 7.5% commercial and industrial growth [13][14] Business Line Data and Key Metrics Changes - The company achieved a new system peak of 8,648 megawatts in August 2025, exceeding the previous year's peak by over 400 megawatts [6] - Customer satisfaction metrics improved, with the company ranking in the top quartile nationally for residential customer satisfaction and in the second quartile for business customers [8] Market Data and Key Metrics Changes - The customer base grew by 2.4% in 2025, driven by new businesses and residents in Arizona, indicating a strong economic environment [14] - The semiconductor sector, particularly with TSMC's expansion, is expected to drive significant economic activity, with agreements anticipated to spur at least $250 billion in additional investments [8][9] Company Strategy and Development Direction - The company is focused on processing its rate case, executing grid expansion plans, and maintaining affordable rates for customers while finalizing commercial opportunities with large customers [5][11] - The capital program emphasizes reliability, grid resiliency, and meeting customer needs, with a rate-based growth guidance of 7%-9% through 2028 [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet rising demand and create long-term value, emphasizing the importance of safety and operational excellence [5][11] - The company aims to achieve a more linear earnings trajectory through the implementation of a formula rate, which would provide more consistent cost recovery [87][93] Other Important Information - The company successfully reduced O&M per megawatt hour by 3.3% year-over-year in 2025 and aims for further reductions in 2026 [15] - The company is actively engaged in discussions regarding potential new nuclear projects, although these are viewed as medium to long-term opportunities [61] Q&A Session Summary Question: Update on capacity growth and IRP planning - The company plans to file an updated 15-year integrated resource plan mid-year, focusing on load forecasts and resource planning [19][20] Question: Credit metric update and holdco debt - The holdco debt percentage at year-end was approximately 17%, within the targeted range [22] Question: Future sales growth and assumptions - The sales growth forecast of 5%-7% is based on existing demand and projects with high confidence, with potential upside from uncommitted load [27][28] Question: Implications from the UNS case - The UNS case was viewed as generally constructive, with differences noted between UNS and APS situations [41][43] Question: Breakdown of committed versus uncommitted load - The majority of the 4.5GW committed load is from high load factor customers, primarily data centers, with ongoing negotiations for uncommitted load [50][51] Question: FFO to debt ratio and future outlook - The FFO to debt ratio is expected to remain above 14%, with a focus on maintaining a cushion for credit metrics [84][86] Question: TSMC expansions and clarity on future plans - The company is in active discussions with TSMC regarding their expansion plans, with readiness to articulate utility infrastructure needs once solidified [104]

Financial Data and Key Metrics Changes - In Q4 2025, the company earned $0.13 per share, compared to a loss of $0.06 in Q4 2024, reflecting strong operational execution and cost management [12] - For the full year 2025, earnings were $5.05 per share, down from $5.24 in 2024, primarily due to weather impacts, with a $0.71 drag from weather normalization [13][15] - Weather-normalized sales growth for Q4 was 6.8%, contributing to a full-year growth of 5%, including 2% residential growth and 7.5% commercial and industrial growth [14][15] Business Line Data and Key Metrics Changes - The company achieved a new system peak of 8,648 megawatts in August 2025, exceeding the previous year's peak by over 400 megawatts [6] - Customer satisfaction metrics improved, with the company ranking in the top quartile nationally for residential customer satisfaction and in the second quartile for business customers [8] Market Data and Key Metrics Changes - The company noted strong growth among commercial and industrial customers, particularly in chip manufacturing and data centers, with long-term sales growth projected at 5%-7% through 2030 [8][9] - The U.S. Department of Commerce and Taiwan announced agreements expected to spur at least $250 billion in additional semiconductor investment in the U.S., benefiting the company's market position [8] Company Strategy and Development Direction - The company plans to focus on processing its rate case, executing grid expansion plans, and maintaining affordable rates for customers in 2026 [5][11] - Investments in infrastructure are aimed at supporting Arizona's economic growth and maintaining grid reliability, with a capital program focused on reliability and resiliency [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet rising demand and create long-term value, emphasizing a commitment to safety and operational excellence [5][11] - The company is focused on cost efficiencies, with a goal of reducing O&M per megawatt hour, achieving a 3.3% decrease in 2025 [16] Other Important Information - The company is actively engaged in discussions regarding its integrated resource plan (IRP), which will reflect known and committed customer demand over a 15-year period [20][50] - The company is exploring financing options for transmission build-out, including potential customer financing and federal grants [84] Q&A Session Summary Question: Update on capacity growth and IRP planning - The company plans to file an updated 15-year integrated resource plan mid-year, detailing load forecasts and resource plans [20] Question: Credit metric update and holdco debt - Holdco debt was at 17% at year-end 2025, within the target range, with plans to maintain modest levels in 2026 [24] Question: Future sales growth and assumptions - The sales growth forecast of 5%-7% is based on existing demand and projects with high confidence, with potential upside from uncommitted load [30] Question: Implications from the UNS case and formula rate decision - The UNS case was seen as generally constructive, with differences noted between UNS and APS, particularly regarding growth and regulatory lag [44] Question: Breakdown of committed versus uncommitted load - The majority of committed load is from high load factor customers, including TSMC, with ongoing negotiations for uncommitted load [53] Question: FFO to debt basis and forecast period - The company aims to maintain an FFO to debt ratio of 14%-16%, focusing on improving credit metrics through regulatory dialogue [90] Question: Transparency and earnings trajectory with formula rate - The company aims for more consistent and linear earnings trajectories post-formula rate implementation, improving visibility for investors [92]

Financial Data and Key Metrics Changes - In Q4 2025, the company earned $0.13 per share, compared to a loss of $0.06 in Q4 2024, reflecting strong operational execution and cost management [11] - For the full year 2025, earnings were $5.05 per share, down from $5.24 in 2024, primarily due to weather impacts, with a $0.71 drag from normal weather conditions [12] - Weather-normalized sales growth for Q4 was 6.8%, contributing to a full-year growth of 5%, with residential growth at 2% and commercial and industrial growth at 7.5% [12][13] Business Line Data and Key Metrics Changes - The company achieved a new system peak of 8,648 megawatts in August 2025, exceeding the previous year's peak by over 400 megawatts [6] - The generating fleet, particularly Palo Verde, operated at a 100% summertime capacity factor, highlighting operational excellence [6] - Customer satisfaction metrics improved, with the company ranking in the top quartile nationally for residential satisfaction and first quartile in digital experience [7] Market Data and Key Metrics Changes - The customer base grew by 2.4% in 2025, driven by new businesses and residents in Arizona, indicating a robust economic environment [12] - The semiconductor sector, particularly with TSMC's expansion, is expected to drive significant economic activity, with agreements potentially leading to $250 billion in investments [7][8] Company Strategy and Development Direction - The company is focused on executing its rate case, expanding grid infrastructure, and maintaining affordable rates for customers while pursuing commercial opportunities with large customers [5][10] - Investments in gas and renewable energy resources are planned to support Arizona's growth, with a capital program aimed at reliability and resiliency [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet rising demand and create long-term value, emphasizing ongoing cost management and operational excellence [10][16] - The regulatory environment is being navigated with a focus on reducing lag and ensuring appropriate cost allocation to support growth [9][10] Other Important Information - The company is committed to maintaining a disciplined financing approach, with nearly $500 million of equity needs already priced for 2026 [16] - The rate case is on track, with hearings scheduled for May, and management remains open to settlements but is focused on traditional processing [9][60] Q&A Session Summary Question: Update on capacity growth and IRP planning - The company plans to file an updated 15-year integrated resource plan mid-year, focusing on load forecasts and resource planning [19] Question: Credit metric update and holdco debt - Holdco debt was at 17% at year-end 2025, within the target range, with plans to keep it modest [22] Question: Future sales growth and assumptions - The sales growth forecast of 5%-7% is based on existing demand and projects in development, with potential upside from uncommitted customers [28][29] Question: Implications from the UNS case - The UNS case was seen as constructive, with differences noted between their situation and APS, particularly regarding growth and regulatory lag [39][45] Question: TSMC expansions and committed load - The majority of committed load is from high load factor customers, including TSMC, with ongoing negotiations for uncommitted demand [51][52] Question: Financing for transmission build-out - The company is exploring various financing sources, including customer financing and federal grants, for capital expenditures [82]

Powering Arizona's Future Forward Looking Statements Fourth-Quarter and Full-Year 2025 Financial Results February 25, 2026 This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," "require," "intend," "assume," "project," "anticipate," "goal," "seek," "strategy," "lik ...