A key level of resistance has formed in the chart of Pinnacle West Capital (PNW) and breakout could be coming soon…
Pinnacle West Capital (PNW) is a holding company whose principal subsidiary is Arizona Public Service, which is a vertically integrated regulated utility that provides electric service to 1.3 million customers over a 35,000-square-mile service territory in Arizona. The company is benefiting from high credit ratings, which allows it to secure funds at favorable conditions.
Arizona Public Service is the largest and longest-serving electric utility provider in Arizona. The Phoenix area is seeing strong growth in commercial activities with new developments being announced. PNW expects more projects in the area with Red Bull, Ball Corporation, White Claw/Mark Anthony Brewing, Nacero, and While Stack all planning on building facilities.
The company does not have any long-term debt maturing until 2024 and has enough capital to meet its near-term obligations. PNW has a dividend yield of 3.8%, with a payout ratio of 57.8%. In terms of profitability, PNW has a solid gross margin of 44.8% and a net profit margin of 17.4%.
While sales growth over the past five years has been negative, earnings have been positive, highlighted by 19.8% growth over the past year. Revenue and earnings are expected to grow 5.0% and 3.5%, respectively, next year.
PNW is currently trading at a low multiple with a P/E of 15.4 and an EV/EBITDA of 10.6. The stock has seen short term momentum highlighted by a 15.0% one-month return. This has led to a grade of “B” for Trade Grade in our POWR Ratings system, which brings us to a technical view of the stock.
Take a look at the 1-year chart of PNW below with the added notations…
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