IBD's electric utility industry group has continued its outperformance, ranking 24th out of 197 groups. Pinnacle West (PNW) is currently third in the group, boasting a solid yield for the dividend stock, while being a favorite for institutional investors.
Pinnacle West is the holding company for Arizona Public Service, a utility company that provides electricity services to 1.4 million customers in Arizona.
↑ XPinnacle West offers investors a 4.1% annualized dividend yield, backed by an impressive 11-year streak of dividend increases. An upcoming dividend increase this quarter will raise the quarterly payout to 89.5 cents, with an ex-dividend date of Nov. 3.
According to MarketSurge, 68% of Pinnacle West shares are owned by institutional funds. Stocks with high institutional ownership often have solid fundamentals and are likely to outperform in the long term because of institutional interest in those companies.
Pinnacle West is set to report its third-quarter earnings on Nov. 6. Earnings are estimated at $3.48, slightly lower than the year-ago quarter, on revenue of $1.69 billion, an increase of 4%. Full-year EPS is expected to reach $4.92, up from $4.41 last year, before slightly easing to $4.75 in 2025.
The third quarter is typically Pinnacle West's strongest due to increased energy demand for cooling in Arizona's extreme summer heat. With Arizona recording its hottest summer on record in 2024, the company could exceed the $3.48 EPS estimate for the September-ended quarter.
The regulatory environment has been favorable for Pinnacle West, as evidenced by a recent $70 million grant from the U.S. Department of Energy to enhance grid resilience and wildfire safety. State-level regulations remain a key area for investors to watch, especially due to the geographic concentration of Pinnacle West.
Pinnacle West aims to achieve net-zero emissions by 2050, with a target to generate 65% of its energy from clean sources by 2030. Key steps include phasing out coal plants by 2031 and investing in solar power to meet growing energy demands.
Shares of Pinnacle West are forming a flat base with a 91.56 buy point, as per IBD MarketSurge pattern recognition.
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