MeritValue

PINNACLE WEST CAPITAL CORP

PNWdata completeness 100%18 fiscal years on file
The thesis, from the filings

PINNACLE WEST CAPITAL CORP earns about 4% on invested capital, but has diluted owners by 8% over 5 years — worth asking whether the growth reaches owners. The applicable estimate puts fair value near $53.19 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$3.8B1$4.32B2$4.7B3$5.12B3$5.34B3
Net income$635.9M4$500.8M5$518.8M6$626M6$631.6M6
Operating cash flow$860M7$1.24B8$1.21B9$1.61B9$1.81B9
Capital expenditure$1.47B10$1.71B11$1.85B12$2.25B12$2.62B12
Free cash flow (derived)−$613.5M7−$466M8−$638.7M9−$639.4M9−$819.5M9
Total debt$7.21B13$8.08B14$9.03B15$9.43B16$10.6B16
Cash & equivalents$9.97M17$4.83M18$4.96M19$3.84M20$6.6M20
Diluted shares113.2M113.4M113.8M116.2M122.0M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$577.72
your share of equity
Profit it earned you last year
$51.79
Free cash flow it threw off
−$67.19
Debt you’d be carrying
$866

10 shares is a claim on $577.72 of net worth that earned you $51.79 and generated −$67.19 of cash last year, against $866 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
4% avg · 5y
FY21 —FY22 —FY23 5%FY24 4%FY25 4%

It earned an average 4% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+8% shares · 5y

Share count is up 8% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has risen 47% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
DCF · Growth Exit 5Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
Earnings Power Value
$53.19
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$626M
  • growthAssumed0.0%
Graham Number
$81.02
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000764622-24-000016 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0000764622-25-000023 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0000764622-26-000011 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0000764622-24-000016 (ProfitLoss)
  5. 10-K · period ending 2022-12-31 · accession 0000764622-25-000023 (ProfitLoss)
  6. 10-K · period ending 2023-12-31 · accession 0000764622-26-000011 (ProfitLoss)
  7. 10-K · period ending 2021-12-31 · accession 0000764622-24-000016 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0000764622-25-000023 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0000764622-26-000011 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0000764622-24-000016 (PaymentsToAcquireProductiveAssets)
  11. 10-K · period ending 2022-12-31 · accession 0000764622-25-000023 (PaymentsToAcquireProductiveAssets)
  12. 10-K · period ending 2023-12-31 · accession 0000764622-26-000011 (PaymentsToAcquireProductiveAssets)
  13. 10-K · period ending 2021-12-31 · accession 0000764622-23-000023 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-12-31 · accession 0000764622-24-000016 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-12-31 · accession 0000764622-25-000023 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-12-31 · accession 0000764622-26-000011 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-12-31 · accession 0000764622-23-000023 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-12-31 · accession 0000764622-24-000016 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-12-31 · accession 0000764622-25-000023 (CashAndCashEquivalentsAtCarryingValue)
  20. 10-K · period ending 2024-12-31 · accession 0000764622-26-000011 (CashAndCashEquivalentsAtCarryingValue)