What's In The Cards For Pinnacle West (PNW) In Q3 Earnings?

Pinnacle West Capital Corporation PNW is scheduled to release third-quarter 2017 financial results before the market opens on Nov 3. Last quarter, this electricity provider reported a positive earnings surprise of 28.45%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

In August, Arizona Corporation Commission (“ACC”) approved the company’s first rate review agreement in five years. This decision is likely to act as a strong catalyst for the company’s growth, since it will boost Pinnacle West’s Arizona Public Service (“APS”) unit’s revenues by an estimated 3.3%. Notably the new rates, effective from Aug 19, will increase the residential bill by approximately 4.5% or about $6 per month. We may expect the rate increase to get reflected in improved revenues of APS in the to-be-reported quarter.

Meanwhile, the company projects to witness extended outages at its Four Corners power plant, in the second half of this year for the installation of pollution control equipment. This is expected to push up its operating and maintenance cost for third and fourth quarters of 2017, which in turn may dent the bottom line for coming quarters.

Earnings Whispers

Our proven model does not conclusively show that Pinnacle West is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The company has Earnings ESP of -0.07%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pinnacle West carries a Zacks Rank #2. Though the Zacks Rank #2 increases the possibility of a beat, a -0.07% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Pinnacle West Capital Corporation Price and EPS Surprise

Stocks That Warrant a Look

Instead, here are a few players from the same space that have the right combination of elements to post an earnings beat this quarter.

Fortis Inc. FTS has an Earnings ESP of +3.60%. It carries Zacks Rank #3 and is expected to report third-quarter 2017 earnings on Nov 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Spire Inc. SR has an Earnings ESP of +5.59%. It carries Zacks Rank #2 and is expected to report third-quarter 2017 earnings on Nov 15.

American States Water Company AWR has an Earnings ESP of +0.29%. It carries Zacks Rank #2andis expected to report third-quarter 2017 earnings on Nov 6.

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks' private trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report
Fortis Inc. (FTS): Free Stock Analysis Report
American States Water Company (AWR): Free Stock Analysis Report
Spire Inc. (SR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research

Comments on PNW stock