Abstract

Pinnacle West Capital will report its first-quarter 2026 results on May 4, 2026 Pre-Market, and this preview summarizes the latest quarterly performance trends, consensus expectations for revenue and earnings, and the key themes likely to shape investor reaction.

Market Forecast

The market expects Pinnacle West Capital to post first-quarter revenue of 1.09 billion US dollars, implying 9.03% year-over-year growth, with estimated EBIT of 83.06 million US dollars (down 12.06% year over year) and an estimated adjusted EPS of -0.03 US dollars (down 260.17% year over year). Forecast margin details for gross and net profitability are not broadly available for the quarter, but the modeled loss at the EPS line suggests seasonally soft profitability and cost pass-through timing effects.

The company’s revenue base remains anchored in retail electric service, with the most recent business mix led by retail residential electric services at 2.54 billion US dollars and retail non-residential electric services at 2.54 billion US dollars, supplemented by transmission services for others at 129.67 million US dollars and wholesale energy sales at 108.66 million US dollars; against a company-wide revenue growth expectation of 9.03% year over year this quarter, performance focus centers on execution in these core categories. The most promising revenue contributor remains retail residential electric services at 2.54 billion US dollars, which should capture a substantial share of the anticipated year-over-year revenue improvement as customer additions and usage patterns flow through regulated billings.

Last Quarter Review

In the previous quarter, Pinnacle West Capital delivered revenue of 1.13 billion US dollars (up 2.99% year over year), achieved a gross profit margin of 36.26%, recorded GAAP net profit attributable to shareholders of 15.40 million US dollars with a net profit margin of 1.37%, and reported adjusted EPS of 0.13 US dollars (up 316.67% year over year).

A notable financial highlight was EBIT of 121.01 million US dollars, up 43.14% year over year, while revenue finished modestly below prior modeling by 42.23 million US dollars, highlighting top-line seasonality and timing in cost recovery mechanisms. By business line, retail residential electric services contributed 2.54 billion US dollars and retail non-residential electric services another 2.54 billion US dollars, with 129.67 million US dollars from transmission services for others and 108.66 million US dollars from wholesale energy sales; the mix underscores the dominance of retail service revenues in the company’s operating profile. Quarter on quarter, GAAP net profit declined by 96.27%, consistent with the pronounced seasonal step-down that typically follows the strong summer period in the company’s calendar.

Current Quarter Outlook

Retail electric services: demand and margin trajectory

Retail electric services remain the centerpiece of quarterly performance, and the revenue estimate of 1.09 billion US dollars for this quarter points to moderate growth versus the prior year even as the EPS line is expected to dip into a modest loss. This pattern aligns with seasonal usage effects and typical timing mismatches between cost accruals, power procurement expenses, and recovery under rate mechanisms, which can compress margins in shoulder periods. While gross profit margin was 36.26% in the prior quarter, current-quarter margins are likely to be constrained by fixed-cost absorption and purchased power/fuel costs until higher-demand months provide greater operating leverage.

From an operational standpoint, execution in billing and regulatory pass-throughs remains central to stabilizing earnings, and measured progress on cost discipline will help offset variability in fuel and purchased power. Weather-normalized load will influence the top line, but the larger swing factor for profitability in the current quarter is the cadence of cost recovery and controllable O&M. Investors should also watch non-fuel operating items that shape near-term EBITDA and cash conversion. A resilient top line alongside negative EPS guidance suggests that the company is navigating seasonality and cost phasing rather than facing demand erosion, which sets up a potentially sharper recovery in profitability as the year progresses.

Retail residential services: growth drivers

Within the overall retail mix, the retail residential category continues to represent the largest single revenue stream at 2.54 billion US dollars, and it is typically the segment most sensitive to usage trends and customer growth. The current-quarter revenue growth expectation of 9.03% year over year at the consolidated level implies that residential billings will play a central role in the quarter’s top-line improvement, provided normal weather and stable demand. Residential usage patterns can be volatile in early-year periods, which may limit near-term operating leverage; however, as rate structures and customer counts adjust through the year, the segment’s contribution to margin recovery should improve.

Regulatory mechanisms and timing nuances can defer the earnings benefit of residential revenue growth when fuel and purchased power are elevated or when riders settle post-period, which is consistent with the projected negative EPS this quarter despite the healthy revenue growth estimate. Nonetheless, sustained residential demand and customer additions provide a constructive base for full-year revenue and earnings, which is reflected in the company’s previously outlined full-year EPS framework of 4.55 to 4.75 US dollars for 2026. Monitoring the interplay between residential volumes, allowed returns, and cost pass-throughs will be key to interpreting the EPS cadence quarter by quarter.

Key stock-price swing factors this quarter

Short-term share performance is likely to hinge on three elements: the trajectory of cost recovery through regulatory mechanisms, the realized margin outcome relative to the seasonal loss implied by the -0.03 US dollars EPS estimate, and any updates to full-year guidance. The estimated EBIT of 83.06 million US dollars, down 12.06% year over year, points to soft operating leverage in the quarter; a smaller loss than anticipated at the EPS line could catalyze a favorable reaction if investors perceive improved cost control or faster recovery timing. Conversely, a wider loss would reinforce the cautious near-term stance embedded in many “Hold/Equalweight/Market Perform” ratings.

Separately, operational updates tied to large assets can influence sentiment. On March 16, 2026, the company’s utility subsidiary notified regulators of its intent to seek 20-year license renewals for the three nuclear units at the Palo Verde Generating Station, potentially extending operations from the mid-2040s through the mid-2060s. While this does not immediately affect near-term earnings, it is a supportive signal for long-dated capacity availability and capital planning, and it can shape investor expectations for long-term cost of service and reliability. In the context of quarterly results, any commentary that links capital plans and rate base growth to prospective earnings trajectories would help the market gauge the path from this quarter’s seasonal trough to the full-year EPS range.

Analyst Opinions

Analyst commentary over the past few months has been predominantly neutral, with multiple institutions reiterating or adopting Hold/Equalweight/Market Perform stances and a single notable Buy rating. Price targets have typically clustered around the low-to-mid 100s, with several adjustments indicating incremental optimism but a broadly balanced risk-reward view. The neutral majority highlights a preference to wait for clearer evidence that cost recovery, usage trends, and regulatory cadence will translate into steadier intra-year earnings progression.

Wells Fargo maintained an Equalweight rating and adjusted its price target to 106 US dollars, emphasizing a balanced outlook that weighs seasonal earnings volatility against the stability of a regulated revenue base. Morgan Stanley also reiterated an Equalweight stance, fine-tuning its price target to 98 US dollars; the framing suggests that while long-term infrastructure and rate base growth remain constructive, near-term earnings cadence and margin visibility temper upside between seasonally stronger quarters. UBS lifted its price target to 106 US dollars in March, consistent with a neutral posture that recognizes incremental progress but stops short of a conviction overweight given the expected first-quarter loss and the usual shoulder-season sensitivity.

BMO Capital marked the stock at Market Perform with a 106 US dollars target, aligning with peers on the central thesis: the long-term plan, including capital investments and rate base expansion, underpins value, yet quarterly results can be choppy as cost recovery mechanisms and consumption patterns ebb and flow. Mizuho’s Neutral at 103 US dollars similarly captures the wait-and-see approach heading into early-year results, flagging that the path to the company’s full-year EPS range of 4.55 to 4.75 US dollars will likely be back-half weighted. In contrast, Argus maintained a Buy rating and raised its target to 106 US dollars, reflecting confidence in the longer-term earnings power; however, this view remains in the minority versus the cluster of neutral ratings.

The majority neutral stance is anchored in the mechanics of the current-quarter setup: an estimated revenue increase of 9.03% year over year juxtaposed with a projected negative EPS suggests that operating leverage will be limited until higher-demand periods and recovery processes take hold. Analysts expect the company to stay within the previously communicated full-year EPS range if weather, usage, and regulatory factors track closely to assumptions, but they are reluctant to pre-empt stronger conclusions before seeing how first-quarter cost timing flows through the income statement. Several institutions also point to the significance of upcoming updates on rate structures and the translation of capital spending into rate base growth as catalysts for shifting from neutral to more constructive positions later in the year.

From a portfolio construction perspective, the neutral consensus indicates that the first-quarter release is less about beating a high bar and more about confirming stability in the underlying plan. A narrower-than-expected loss could be interpreted as evidence of favorable cost timing or improved controllable O&M discipline, which would support steadying EPS in subsequent quarters. Conversely, a more pronounced loss would validate the cautious tone in Hold/Equalweight ratings and keep the focus on back-half execution. The announcement that the company will pursue long-term license renewals for key nuclear assets provides a supportive backdrop for the multi-decade capital and reliability story, and it could underpin neutral-to-positive long-term sentiment even if the near-term quarterly cadence remains uneven.

In sum, institutional views are neutral overall, reflecting a balance between solid revenue expectations this quarter and the acknowledgment that seasonality and cost pass-through timing can suppress early-year margins. The prevailing analyst framework sets an achievable bar for the first quarter while reserving stronger judgments for the summer-heavy earnings periods when demand and operating leverage typically improve. If the company’s update on May 4, 2026 provides clear linkage between the current-quarter dynamics and reaffirmed full-year guidance, the neutral majority may gradually pivot to a more constructive stance as investors gain confidence in margin normalization and the durability of the earnings plan for 2026 and beyond.