PNW Benefits From Expanding Customer Base, Strategic Investments

Pinnacle West Capital PNW benefits from contributions from an expanding customer base, driven by regional economic development and a rise in demand from data centers. Its cost management and strategic capital investment to strengthen infrastructure boost the company’s performance.

This Zacks Rank #3 (Hold) company faces risks related to unplanned outages in nuclear generation facilities and commodity price volatility.

PNW’s Tailwinds

Pinnacle West Capital benefits from its expanding customer base, driven by strong economic development in its service territory, and reports 2.4% customer growth in the fourth quarter. The company expects 1.5-2.5% retail customer growth and 5-7% retail electricity sales growth through 2030. These include a rise in data center demand and new large manufacturing facilities, expecting a contribution of 3-5% in 2026, with nearly 4.5 gigawatts (GW) of committed high-load customer demand secured. This will boost the company’s revenues and long-term financial performance.

The company plans to reduce operating and maintenance expenses per megawatt-hour through efficiency initiatives, cost control measures and technological development, supporting top-line growth. PNW expects adjusted core O&M expenses of $970-$980 million in 2026, remaining flat year over year.

The company’s strategic capital investments in infrastructure development help maintain service reliability, enhance operational efficiency, optimize asset performance, reduce costs and ultimately drive stronger and more sustainable financial growth. The company invested nearly $2.4 billion in 2025 and plans to invest $8 billion for 2026-2028, allocating $2.1billion in transmission, $2.31billion in distribution and $2.28B billion in generation.

PNW’s Headwinds

The company’s operations are exposed to fluctuations in commodity prices and transportation costs of electricity and natural gas. Potential volatility in market prices of fuel, electricity and other renewable energy commodities could create operational risks for PNW. In addition, deregulation or restructuring of the electric industry may result in increased competition for the company.

The company will be affected by any unplanned outage in nuclear plants stemming from safety reasons, resulting in unexpected production stoppage. If planned maintenance outages of the nuclear units continue longer than expected, it will adversely impact production and operations.

Price Performance of PNW

In the past three months, shares have rallied 12.1% compared with the industry’s 3.5% growth.

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Stocks to Consider

Some better-ranked stocks in the same industry include CenterPoint Energy CNP, DTE Energy DTE and FirstEnergy FE. Each of these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Currently, CNP, DTE and FE’s dividend yields are 2.17%, 3.23% and 3.56%, respectively.

The Zacks Consensus Estimate for CenterPoint Energy, DTE Energy and FirstEnergy 2026 EPS is pegged at $1.91, $7.72 and $2.72, suggesting year-over-year growth of 8.52%,4.89% and 6.67%, respectively.

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FirstEnergy Corporation (FE): Free Stock Analysis Report

DTE Energy Company (DTE): Free Stock Analysis Report

CenterPoint Energy, Inc. (CNP): Free Stock Analysis Report

Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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