Original source text
Key Takeaways Pinnacle West Capital targets 5-7% long-term EPS growth while maintaining disciplined cost management.PNW's first-half 2026 O&M costs fell 4.5% as it plans nearly $7.95B in investment through 2028. PNW plans to convert Cholla to provide about 380 MW of dispatchable generation by 2029. Pinnacle West Capital (PNW - Free Report) is strengthening efficiency through disciplined cost management and tighter control of operating expenses. These efforts support financial stability while creating more flexibility to fund infrastructure investments.PNW’s operations and maintenance (O&M) expenses fell 1.1% year over year to $283.4 million in the second quarter, while first-half 2026 O&M costs declined 4.5% from the prior-year period. The company expects 2026 adjusted core O&M of $970-$980 million, while adjusted O&M, excluding renewable energy and demand-side-management costs, is projected at $1.02-$1.04 billion.
Pinnacle West Capital also remains committed to reducing O&M expenses on a per-megawatt-hour basis over time. PNW’s cost control is increasingly important as it plans to invest $2.6 billion in 2026 and nearly $7.95 billion through 2028 to support infrastructure and 7-9% rate-base growth.
By lowering costs, PNW can improve earnings and capture greater benefits from its expanding customer base and rising electricity demand. The company expects 2026 earnings per share (EPS) of $4.55-$4.75 and 5-7% long-term EPS growth.
The company is also pursuing cost-effective projects. Its planned conversion of the Cholla plant will repurpose existing infrastructure to provide about 380 megawatts of dispatchable generation by 2029, helping meet rising demand without building an entirely new facility.
Overall, PNW’s stable O&M costs amid rising demand and infrastructure investment are positive, while continued efficiency and regulatory recovery could support margins and long-term growth.
Stronger Cost Control Supports Utility GrowthUtilities that control operating costs can improve margins, preserve financial flexibility, fund infrastructure investments and maintain affordable customer rates. Effective cost management also strengthens operations and supports sustainable earnings growth. Alongside PNW, several other utilities also demonstrate strong cost management as highlighted below:
American Electric Power (AEP - Free Report) expects up to $16 billion in cost offsets from load growth, helping spread fixed costs while supporting customer affordability and long-term earnings growth.
PG&E Corporation (PCG - Free Report) expects to meet its 2026 target of reducing non-fuel O&M costs by 2-4%, supporting both customer affordability and greater operating efficiency.
The Zacks Rundown on PNWPNW’s Earnings EstimatesThe Zacks Consensus Estimate for 2026 and 2027 EPS indicates a decrease of 6.53% and an increase of 17.90%, respectively, year over year.
Image Source: Zacks Investment Research
PNW’s Stock Trading at a Premium PNW is trading at a premium to the industry, with a forward 12-month price-to-earnings ratio of 18.92X versus the industry average of 15.42X.
Image Source: Zacks Investment Research
PNW’s Stock Price PerformanceIn the past six months, Pinnacle West Capital’s shares have plunged 2% compared with the industry’s 7.9% fall.
Image Source: Zacks Investment Research
PNW’s Zacks Rank