Pinnacle West Capital (PNW) has drawn fresh attention after completing a US$499.575 million fixed income offering of 4.650% notes due 2029. This move directly affects its capital structure and funding mix.
See our latest analysis for Pinnacle West Capital.
The stock is trading at US$98.82 after a 1-day share price gain of 1.37%. However, the 7-day and 30-day share price returns are down 3.90% and 4.56%, suggesting that recent momentum has softened. At the same time, the year-to-date share price return of 12.12% and 1-year total shareholder return of 13.65% sit alongside a 5-year total shareholder return of 41.70%. Together, these figures point to a steadier long run for investors than the latest moves suggest.
If this bond issue has you thinking about where else capital intensive opportunities might sit in the market, it could be worth scanning 33 power grid technology and infrastructure stocks
With recent returns mixed, solid 3-year and 5-year total shareholder returns, and the stock trading about 6% below the analyst price target, you have to ask: is Pinnacle West Capital undervalued, or is the market already pricing in future growth?
Most Popular Narrative: 6.1% Undervalued
On the most followed narrative, Pinnacle West Capital's fair value of $105.21 sits above the last close at $98.82, framing a modest undervaluation built on detailed growth and regulation assumptions.
Analysts expect earnings to reach $839.9 million (and earnings per share of $6.26) by about June 2029, up from $654.1 million today. The analysts are largely in agreement about this estimate.
Want to see what underpins that earnings jump, margin expansion, and higher future multiple assumptions, and how those feed into a discounted value using a 7.11% rate?
Result: Fair Value of $105.21 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, the narrative could easily shift if regulatory lag around 2026 rate decisions tightens margins, or if heavy gas and grid spending proves hard to recover.
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Another Angle: Earnings Multiple Sends A Mixed Signal
While the analyst narrative suggests a fair value of $105.21, Pinnacle West Capital currently trades on a P/E of 18.3x versus 21.3x for the US Electric Utilities industry and 21.8x for peers, compared with a fair ratio of 19.7x. That gap hints at some value support, but also raises the question of whether the market is baking in lower growth or higher risk than analysts assume.
Before leaning too heavily on that P/E gap, it is worth checking how it stacks up against the fuller valuation breakdown, including that fair ratio and peer comparison, in See what the numbers say about this price — find out in our valuation breakdown.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Pinnacle West Capital for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With sentiment looking balanced between opportunity and caution, it makes sense to move quickly and test the numbers yourself, then weigh up the 4 key rewards and 3 important warning signs
Looking for more investment ideas?
If you stop with just one stock, you could miss opportunities that fit your goals even better, so use the tools available and give yourself options.
- Target dependable payouts by checking companies in the 11 dividend fortresses that may offer higher yields with a focus on sustainability.
- Hunt for potential bargains using the 46 high quality undervalued stocks that bring together quality fundamentals and prices that may not fully reflect them.
- Strengthen your watchlist with companies from the solid balance sheet and fundamentals stocks screener (47 results) where financial resilience and underlying performance are both in focus.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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