Pinnacle West Capital (PNW) has seen some movement lately as investors consider how its recent returns compare with broader utility sector trends. Shares are trading near $89, and the company’s annual revenue growth is holding steady.

After a modest climb earlier this year, Pinnacle West Capital’s share price has given back some ground in recent days, but the broader momentum remains intact. The year-to-date share price return of 5.7% is underpinned by a 6% total shareholder return over 12 months. The three-year total return of nearly 50% hints at resilience for long-term investors, even with short-term fluctuations appearing lately as sentiment shifts.

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With the stock trading close to $89 and still just below most analyst targets, investors now face a key question: does Pinnacle West Capital offer undervalued potential, or has the market already priced in ongoing growth?

Most Popular Narrative: 7% Undervalued

Pinnacle West Capital recently closed at $89.12, while the most widely followed narrative pegs its fair value at $96.25. This signals a gap that has caught the market’s attention and brings some key assumptions about future growth and profitability into the spotlight.

“Pinnacle West's accelerated infrastructure investments in transmission, distribution, and generation (including the new regional natural gas pipeline and major grid projects) are expected to significantly expand the regulated rate base, supporting higher allowed returns and future revenue growth. The ongoing influx of large commercial and industrial customers (notably data centers and manufacturers), along with a backlog of nearly 20 GW in uncommitted customer interconnection requests, signals substantial upside potential for volumetric sales and rate base expansion, positively impacting revenue and long-term earnings.”

Curious why this fair value stands out? The narrative centers on bold bets about customer demand, accelerating investments, and a massive shift in the company’s earning power. It is all built on a handful of aggressive, closely watched financial forecasts. See the exact growth assumptions and what could push this valuation even higher in the full story.

Result: Fair Value of $96.25 (UNDERVALUED)

However, delays in regulatory relief or overbuilding amid uncertain demand could still challenge Pinnacle West Capital’s upside and alter the current outlook.

Build Your Own Pinnacle West Capital Narrative

If you see things differently or want to dig into the numbers yourself, you can build and share a custom view of Pinnacle West Capital’s story in just a few minutes. Do it your way

A great starting point for your Pinnacle West Capital research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.