Pinnacle West Capital Outlook - A Bearish Technical Picture But Strong Fundamentals?

Market Snapshot

Takeaway: Pinnacle West Capital (PNW) is showing a falling price trend (-1.31%) and a weak technical outlook, but its fundamentals still maintain a decent score of 4.91. The recent analyst ratings are neutral overall, with mixed opinions.

News Highlights

Recent news has touched on a variety of unrelated themes, from changes in U.S. vaccine policies to uranium mining developments in Utah and China’s factory activity report. For investors in PNW, the most relevant mention is a May 14 article titled “4 Utility Stocks to Bet on From the Thriving Electric Power Industry,” which highlights the importance of clean energy and government support for utilities like Pinnacle West. While not directly referencing the company, it reflects the broader industry's potential, especially as utilities shift toward cleaner energy sources.

Analyst Views & Fundamentals

Pinnacle West has received two analyst ratings in the last 20 days. Both were neutral, from UBS and Mizuho. The simple average rating is 3.00, while the performance-weighted rating is 2.43. This means the analysts are not enthusiastic but also not bearish, though there’s a slight bias toward caution.

The ratings are not aligned with the stock's falling price trend, which suggests a potential mismatch between sentiment and current performance. The weighted rating score is lower than the average, implying that the more influential analysts (weighted by historical performance) are more cautious.

Key fundamental values and internal diagnostic scores include:

• Basic earnings per share (YoY growth rate): -19.07% (Internal diagnostic score: 3.00)
• Diluted earnings per share (YoY growth rate): -19.79% (Internal diagnostic score: 3.00)
• Income tax / Total profit: 12.79% (Internal diagnostic score: 0.00)
• Cash-UP: -0.42 (Internal diagnostic score: 3.00)
• Total assets turnover ratio: 8.64% (Internal diagnostic score: 2.00)
• Current assets / Total assets: 6.12% (Internal diagnostic score: 1.00)
• Long-term debt to working capital ratio: 7.09% (Internal diagnostic score: 1.00)
• Price-to-Cashflow (PCF): 38.09 (Internal diagnostic score: 2.00)
• Price-to-Sales (PS): 7.33 (Internal diagnostic score: 0.00)

The company has a mixed fundamental profile with some strong cash flow and asset turnover metrics, but weak earnings growth and high PCF/PS ratios point to possible overvaluation or poor performance.

Money-Flow Trends

Big-money investors are showing a positive overall trend in flows, with extra-large and block investors contributing the most inflow (60.13% and 54.45%, respectively). This suggests institutional confidence despite the stock’s falling price. On the other hand, retail investors are more cautious, with small and medium flows trending negatively. Overall, the inflow ratio for the stock is 53.37%, indicating a net positive flow.

Key Technical Signals

PNW’s technical outlook is weak, with a technical score of 2.88 and 2 bearish indicators versus 0 bullish ones. Here’s a breakdown of the key signals:

• Williams %R (WR) Oversold: Score: 3.04 (Internal diagnostic score) — neutral strength, but repeated across five days.
• Dividend Payable Date: Score: 1.00 (Internal diagnostic score) — strongly bearish with a 25% win rate and average return of -1.50%.
• Marubozu White: Score: 4.59 (Internal diagnostic score) — neutral to bullish with a 54.55% win rate and average return of 0.55%.

On recent dates, WR Oversold was active from September 3rd to 9th, and Marubozu White appeared on the 9th. This mix of signals suggests a mixed chart pattern, but with bearish dominance due to the dividend signal.

Overall, the technical indicators show a weak market condition, with a declining risk profile. Investors are advised to avoid entering positions in the short term.

Conclusion

While Pinnacle West Capital has relatively strong fundamentals (score: 4.91) and positive institutional flows, the technical outlook is weak (score: 2.88) with two bearish indicators in play. Analysts remain neutral, but the declining price trend suggests caution. Given the discrepancy between fundamentals and technicals, a wait-and-see approach may be the best strategy. Consider waiting for a pull-back or clearer technical confirmation before making any moves.