PNW earnings analysis
What we found in PNW's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Pinnacle West delivered Q2 revenue of $1.456 billion, up 7.1% year over year, as weather, customer growth and large-load demand lifted sales; however, diluted EPS fell 9.5% to $1.43 as higher fuel costs, depreciation and interest expense outweighed the revenue gain. Operating margin compressed to approximately 22.9% from 24.6% a year earlier, though it improved substantially from Q1's 11.4% seasonal level. Management's demand outlook remains constructive, but regulatory recovery, substantial $2.600 billion 2026 capex, and rising financing costs are central offsets.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth accelerated in Q2
- Q2 operating revenue rose $97 million, or 7.1%, year over year to $1.456 billion and increased $306 million, or 26.6%, from Q1 2026 revenue of $1.150 billion. Weather added $19 million and higher usage/customer growth added $18 million to revenue less fuel and purchased power versus Q2 2025.
- Seasonal margin and year-to-date earnings improved
- Operating margin was approximately 22.9%, up from 11.4% in Q1 2026 as seasonal revenue improved. Six-month net income attributable to common shareholders increased $23 million to $211 million, supported by $41 million of weather benefit and $38 million from usage/customer growth net of fuel.
- Large-load demand remains strong
- Retail customers increased 2.1% year over year, while weather-normalized retail kWh sales rose 9.5%. Commercial and industrial weather-normalized sales grew 13.6%, driven by ramping data-center and large-manufacturing customers.
- O&M declined despite grid investment
- Q2 operations and maintenance expense declined $4 million to $283 million, including an $18 million reduction in renewable-energy and similar regulatory-program costs. For the six months, O&M declined $27 million to $560 million.
- Large multi-year investment program
- Management forecasts APS capital expenditures of $2.600 billion in 2026, $2.650 billion in 2027, and $2.700 billion in 2028, excluding the Cholla gas-conversion project expected to cost up to $440 million.
- Rate case could support future recovery
- APS's 2025 rate-case rejoinder seeks a $608.7 million net revenue-requirement increase after adjustor transfers. The hearing concluded July 7, 2026, and the proceeding is anticipated to be resolved before year-end.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Quarterly EPS and net income declined
- Diluted EPS was $1.43, down $0.15, or 9.5%, from $1.58 in Q2 2025 and below the $1.46 consensus estimate. Q2 net income attributable to common shareholders fell $14 million to $179 million despite the $97 million revenue increase.
- Higher debt costs offset operating growth
- Interest charges rose $20 million year over year to $122 million in Q2, principally due to higher debt balances. For the first six months, interest charges increased $41 million to $238 million.
- Fuel costs compressed year-over-year margins
- Gross margin declined to 61.7% from 64.9% in Q2 2025 as fuel and purchased-power expense increased $81 million, or 17.0%, to $558 million, faster than the 7.1% increase in revenue. Operating margin declined about 170 basis points year over year from approximately 24.6% to 22.9%.
- Rate-case outcome remains uncertain
- The pending rate case has material regulatory outcome risk: APS seeks a $608.7 million net increase, while ACC Staff recommended a $506.5 million total base-revenue increase and RUCO recommended $200.2 million to $278.1 million. APS cannot predict the decision or timing.
- Capital program requires external financing
- Operating cash flow declined $34 million year over year to $629 million for the first six months, while investing cash outflow was $1.200 billion. The resulting funding gap was supported by $574 million of financing cash flow.
- New ozone litigation creates permitting uncertainty
- No new or revised risk factors were identified in Item 1A versus the 2025 Form 10-K. However, environmental litigation was added to Other Information: a coalition filed a Ninth Circuit petition on May 22, 2026 challenging the Phoenix-Mesa ozone determination; APS cannot predict the outcome.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.43
- Gross margin
- 61.7%
- Operating margin
- 22.9%
- Segment
- Regulated electricity segment (APS): $1.456 billion of operating revenue; all other operating activities were insignificant.
What they said about what is next.
The 10-Q does not provide numeric EPS or revenue guidance. Management projects 2026 customer growth of 1.5%-2.5%, weather-normalized retail kWh sales growth of 4.0%-6.0%, and large data-center/manufacturing load contribution of 3.0%-5.0%; it projects 2030 average annual retail-sales growth of 5.0%-7.0%.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 4, 2026
- Pinnacle West Capital Corporation (PNW) reported a notable recovery in Q1 2026, achieving a net income of $33 million compared to a net loss of $5 million in the same period last year. Revenues surged to $1.15 billion,…
- 10-K · February 25, 2026
- Pinnacle West (Pinnacle West/APS) remains a vertically integrated, regulated electric utility focused on serving ~1.4 million Arizona customers through its principal subsidiary, Arizona Public Service (APS), with…
- 10-Q · November 3, 2025
- Pinnacle West reported Q3 2025 revenue of $1,820,741,000, up $51,940,000 versus Q3 2024, with operating income of $581,846,000 (32.0% operating margin) and diluted EPS of $3.39. Operating performance improved (gross…
- 10-Q · May 1, 2025
- Pinnacle West (consolidated with APS) reported Q1 revenue of $1,032,280 (thousands), up $80,568 (8.5%) versus Q1 2024 but down versus the prior quarter; operating margin compressed to 5.5% and Pinnacle West reported a…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
Read the next one first.
We read every filing PNW makes the day it lands, and put it next to what the options market did about it. Members get both, and an alert when a filing arrives.
Cancel anytime · Month to month · Switch tiers whenever