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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Pinnacle West Capital Corporation (XNYS:PNW) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
PNW
Name:
PINNACLE WEST CAPITAL CORPORATION (XNYS:PNW)
Sector:
- 50975.00K
Industry:
Utilities�Regulated Electric
CEO:
Mr. Jeffrey Guldner
Total Employees:
91
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -1.74% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF PINNACLE WEST CAPITAL CORPORATION(PNW) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND UTILITIES�REGULATED ELECTRIC INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
74.9
One Month Price Target:
$75.03
Six Month Price Target :
$75.68
Likely Price in One Year's Time:
Ticker:
$76.46
Likely Trading Range Today Under (Normal Volatility)
$74.64
Price Upper limit ($) :
$75.16
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$71.77
This week:
$67.91
This month :
$60.92
Other Primary facts
Market Cap:
8.43B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
113.04M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
12.92%
-16.5%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$89.41
$82.81
$60.39
$66.99
Medium risk (<10%) entry points
Buy Call
Sell Call
$80.67
Buy Put:
Sell Put:
$79.26
$69.12
$70.54
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
PNW
Sharpe Ratio:
-0.35%
Comparison:
PNW, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -129.96% lower than the industry
& is -115.40% lower than the market/S&P 500 average
Average Returns/Yield of
PNW
Daily returns:
0.00%
Weekly returns:
0.01%
Monthly returns:
0.03%
Yearly returns:
7.85%
Comparison of returns:
Average annual returns/yield (last 3 years) is -94.76% below industry average
Classification:
PNW, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.7
Statistical test of Returns:
PNW has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.03%
Weekly Volatility:
4.54%
Monthly Volatility:
9.09%
Yearly Volatility:
31.49%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.97%
Volatility in last five trading days has been -52.45% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.17%
Weekly VaR:
-9.33%
Monthly VaR:
-18.66%
How Much Can the price of
PNW
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-64.64%
This translates to price declining to:
$62.55
This translates to price declining to:
$26.48
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
PNW is a 31.71% riskier investment compared to the market/S&P 500 & is 12.83% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 0.17% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
PNW
Beta in relation to market/S&P 500--0.31
Expected beta in 1 year's time:
0.482
Expected beta in 3 year's time:
0.681
Unlevered (debt free) Beta:
0.146
Beta in relation to Nasdaq (XNAS):
0.494
Beta in relation to all global stocks::
0.791
Beta Comparison & Analysis
Beta of competitors/peers::
0.855
Beta is -63.74% lower than peers
Average Industry Beta:
0.5
Beta is -37.93% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
3.33%
Sustainable growth rate is -4.58% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.049
Alpha is -481.33% below industry average alpha yield
Alpha is -310% below the market average
Analysis of Cost of Capital of
PNW
Equity cost of capital:
0.053
Equity cost of capital is -19.75% below industry mean WACC
Unlevered (without debt) cost of capital:
2.48%
Before-tax cost of debt:
2.85%
After-tax cost of debt:
2.25%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.25%
WACC is -21.15% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$34.42
Revenue growth rate per share of (3Y):
1.4
Annual revenue growth rate is -292.76% below industry average
EPS:
$5.30
Expected Annual growth rate of EPS (3Y):
2.38%
Expected future EPS growth rate is -138.46% lower than the Utilities�Regulated Electric industry
Free cash flow (FCF) per share:
-
Balance sheet equity growth per share: 18.77%
Equity growth rate per share is 219.92% higher than the industry
Debt per share
$70.44
EBITDA per share
$15.06
Valuation Analysis Today of
PNW
P/E Ratio:
16.57
P/E Ratio of Competitors/Peers:
12.97
P/E ratio is 27.69% higher than main peers & is -40.17% lower than the industry
Stock price/value with industry average P/E ratio: $146.75
PNW is -48.96% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $102.68
Present value of the expected future dividends only: $76.87
P/S (Price to Sales ratio):
2.18
Price to sales ratio is -25.04% below the industry mean
P/B (Price to book value ratio):
1.4
-
-
Net income growth rate (3Y):
20.22%
Net income growth rate is -786.39% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 15.71%
Dividend yeild: 4.51%
Previous Dividend: $0.85
Previous adjusted dividend: $0.85
Previous Dividend: $3.38
Expected next dividend best case: $0.87
Expected next dividend worst case: $0.83
Average dividend payment (long-term): $0.82
Average dividend increase/decrease (growth rate) % per period: 0.84%
Expected next dividend payment date: 30/08/2022
Expected next dividend record date: 08/01/2022
Expected next dividend declaration date: 19/07/2022
Previous dividend payment date: 06/01/2022
Previous dividend record date: 05/02/2022
Previous dividend declaration date: 20/04/2022
Dividend History:
2022-04-29--$0.85
2021-11-15--$0.85
2021-04-30--$0.83
2022-01-31--$0.85
2021-07-30--$0.83
2021-01-29--$0.83
Dividend growth rate is -184.00% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
134.26%
Net debt to equity ratio:
140.16%
Debt to assets ratio:
35.86%
Net debt to assets ratio:
37.44%
Debt-to-asset ratio is -42.94% below industry average
Ability to repay debt:
Interest coverage ratio:
7.18
Interest coverage ratio is 178.69% more than industry average
Looking forward:
Debt growth rate:
26.24%
Annual debt growth is -43% lower than industry average debt growth rate
Debt repayment rate in last quarter: 2.20%
Analysis of Key Statistics
Correlation of price movement with the market:
0.601
Statistical significance of correlation:
PNW has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.597
Stock price is 0.68% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.597
Correlation of price movement with Nasdaq (^IXIC):
0.03
Covariance of price movement with the market:
0.036
Kurtosis
13.364
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-0.646
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
PNW
Gross Profit Margin Ratio:
173%
Operating Profit Margin Ratio:
20.88%
Operating profit margin is 79.43% higher than the industry
Net Profit Margin Ratio:
173%
Effective Tax Rate:
16.13%
Effective tax rate is -19.90% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
10.12%
Return on equity (ROE) is 11.30% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
2.70%
Return on assets (ROA) is 16.89% higher than the industry
Financial Leverage:
1.6x
Current Ratio:
1
Current ratio is -58.28% below industry average
Cash Conversion Cycle (days):
-124.5
Cash conversion cycle is -231.78% below industry average
The remaining useful life of property plant & equipment is: 1.2 years
Stock based compensation to net income ratio:
0.89%
In-depth Efficiency Analysis
Revenue generated per employee:
42.8M
Each employee generates 1457% more revenue than industry average revenue per employee
EBITDA generated per employee:
18.7M
Each employee generates 1508% more EBITDA than industry average revenue per employee
Profit generated per employee:
6.6M
Each employee generates 1518% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 560.2K
Each employee generates 1600% more free cash flow than industry average revenue per employee
Assets/Capital per employee
226.4M
Each employee generates 1600% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
PNW
EBR-B
BRAZILIAN ELECTRIC POWER COMPANY (XNYS:EBR)
OGE ENERGY CORP. (XNYS:OGE)
CMS-PB
NEXTERA ENERGY PARTNERS UNT (XNYS:NEP)
UGI CORPORATION (XNYS:UGI)
BROOKFIELD RENEWABLE PARTNERS UNT (XNYS:BEP)
Algonquin Power & Utilities Corp. (XNYS:AQN)
NRG ENERGY, INC. (XNYS:NRG)
Current Analyst Ratings
Strong buy�4%
Buy�0%
Hold�46%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
3.89B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.16B
1.73B
-
-
-
-
916.68M
916.68M
6.42M
237.23M
746.37M
1.70B
812.27M
600.04M
735.29M
118.60M
600.04M
Statement of Cash Flow
Date:
Period:
203.64M
Differed Income Tax :
3.52M
Stock Based Compensation :
5.34M
Change in Working Capital :
83.27M
Accounts Receivables:
66.15M
Other Working Capital:
8.60M
Other Non-Cash Items:
23.59M
Net Cash Provided by Operating Activities:
340.61M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 361809.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
13.97M
-
13.97M
439.73M
379.06M
761.84M
1.59B
16.78B
-
-
1.58B
-
1.98B
20.61B
-
22.20B
343.26M
363.90M
222.49M
41.63M
847.95M
1.60B
7.96B
3.77B
14.55B
-
16.15B
2.71B
3.28B
- 53708.0K
-
March 31, 2022 at 6:00:00 AM
3.08B
5.93B
22.08B
-
8.33B
8.3B
361.75M
- 374286.00K
- 374341.00K
- 179050.00K
-
-
- 94265.00K
311.05M
37.73M
-
4.00M
13.97M
9.97M
340.61M
- 391583.00K
- 50975.00K
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
PNW
2023
2024
2025
2026
2027
$87.86
$89.69
$91.56
$93.47
$95.42