Pinnacle West Capital (PNW) — Q2 2026 Earnings Preview

Timing clarification: PNW is scheduled to release results before the market opens Tuesday, August 4, 2026, with its conference call at 12:00 p.m. ET. Because today is August 4, the report is due today, not tomorrow. (marketbeat.com)

Earnings setup

Metric	Q2 2026 expectation	Q2 2025 actual
EPS	Approximately $1.46	$1.58
Revenue	Approximately $1.40 billion	$1.36 billion

Published estimates range from roughly $1.45 to $1.48 per share, with revenue expectations around $1.40-$1.41 billion. That implies approximately 8% year-over-year EPS contraction despite modest revenue growth. (tipranks.com)

PNW began 2026 strongly, reporting first-quarter EPS of $0.27, versus a $0.04 loss one year earlier. Management subsequently maintained weather-normalized full-year guidance of $4.55-$4.75 per share, alongside assumptions for 1.5%-2.5% customer growth and 4%-6% weather-normalized retail sales growth. (pinnaclewest.com)

Investment view going into the report

The quarterly EPS number matters, but the larger issue is whether PNW can convert Arizona’s exceptional electricity-demand growth into earnings without excessive regulatory lag, financing needs or customer-affordability pressure.

The report should therefore be judged on four questions:

1. How much of the quarter’s growth was weather versus underlying load?
2. Is full-year guidance becoming conservative after a strong first half?
3. What did management learn from the recently completed APS rate-case hearing?
4. Can large-load demand produce attractive, customer-funded investment rather than simply more capital needs?

The shares entered the event at approximately $101, with a trailing P/E near 19x. That valuation leaves less room for a merely weather-driven beat without improvement in the longer-term regulatory and capital outlook.

1. Weather should be a meaningful tailwind

Weather appears favorable relative both to normal conditions and to the relatively mild comparison period in Q2 2025.

• Phoenix’s April mean temperature was 4.4°F above normal, with 385 cooling degree-days versus a normal 259.
• May’s mean temperature was 2.1°F above normal.
• June’s mean temperature was 3.6°F above normal, with 909 cooling degree-days versus a normal 792. June 2026 ranked as Phoenix’s third-warmest June by mean temperature and second-warmest by average low. (forecast.weather.gov)

That is an easier comparison than Q2 2025, when PNW said cooling degree-days were 15.4% below Q2 2024 and weather was the principal reason earnings declined. (s22.q4cdn.com)

What to watch: A beat driven largely by weather is lower quality than one driven by weather-normalized commercial and industrial sales. Because guidance is presented on a weather-normalized basis, management may retain excess weather earnings as a cushion rather than immediately raising guidance.

2. Underlying sales growth is the most important operating KPI

First-quarter weather-normalized retail sales increased 9.4%, or approximately 7.4% after adjusting for a prior-year unbilled-revenue item. Commercial and industrial growth was particularly strong as semiconductor facilities, data centers and other large customers continued ramping.

The key Q2 question is whether growth remains near or above the 4%-6% full-year target after the unusually strong first quarter. Investors should focus on:

• Weather-normalized retail sales growth.
• Commercial and industrial sales growth.
• Residential customer growth versus the 1.5%-2.5% target.
• Changes in the 4.5 GW committed large-load pipeline.
• Progress converting some portion of the roughly 20 GW uncommitted queue into contracts.

A post-quarter data point is encouraging: APS customers set a record 9,053 MW peak on July 24, approximately 4.7% above the prior record of 8,648 MW. Because that occurred in July, it will not affect Q2 results, but it reinforces the demand-growth thesis heading into the third quarter. (aps.com)

3. Transmission recovery should remain supportive

Higher transmission revenue added approximately $27 million, or $0.16 per share, to first-quarter year-over-year results. Unlike retail investment, APS’s FERC-regulated transmission investment benefits from annual formula-rate recovery and therefore carries substantially less regulatory lag.

Management has outlined more than $6 billion of cumulative transmission investment through 2035, with annual transmission capital spending rising from approximately $550 million in 2026 to $860 million in 2028.

Investors should look for:

• Continued year-over-year transmission earnings growth.
• The effect of the latest annual transmission-rate update.
• Any increase in the multiyear transmission capital plan.
• Confirmation that wholesale wheeling revenue continues to offset part of the cost to retail customers.

This is arguably PNW’s highest-quality growth channel because the recovery mechanism is more predictable than Arizona retail ratemaking.

4. Expense control will determine the quality of the quarter

PNW’s Q1 beat also benefited from lower operations and maintenance expense, including lower planned-outage costs and reduced energy-efficiency program spending. The Q2 comparison may be less favorable.

Potential headwinds include:

• A planned 36-day Palo Verde Unit 2 refueling outage, which began near the end of Q1 and extended into Q2.
• Higher depreciation as new plant enters service.
• Higher interest expense due to increased debt balances.
• Equity dilution from PNW’s financing program.
• The absence of certain prior-year El Dorado investment gains.

Management’s 2026 target is for adjusted O&M of $1.02-$1.04 billion, roughly flat to slightly down from 2025 despite rapid customer and sales growth. Maintaining that range would support the argument that load growth can create operating leverage rather than simply driving matching cost growth.

5. The APS rate case is the central valuation catalyst

The evidentiary hearing concluded on July 10. The administrative law judge must now issue a Recommended Opinion and Order, after which the Arizona Corporation Commission will consider amendments and vote on a final decision. Management continues to expect a decision later in 2026. (aps.com)

PNW is seeking several economically significant provisions:

• A substantial increase in APS’s base revenue requirement.
• A 10.7% allowed return on equity.
• Twelve months of post-test-year plant recognition.
• A formula-rate adjustment mechanism designed to reduce regulatory lag.
• Cost allocation intended to ensure that data centers and other large-load customers pay the incremental costs they create.

APS says its proposal would raise data-center rates by more than 45% and use updated cost allocation to protect residential and small-business customers from growth-related costs. (aps.com)

The precise quarterly EPS result is less consequential than management’s confidence regarding the formula-rate mechanism, allowed ROE and treatment of new investment. A constructive outcome could materially improve cash conversion and narrow the gap between PNW’s rapid rate-base growth and its 5%-7% long-term EPS growth target.

6. Large-load contracts and the resource plan could reshape the capital outlook

At the last call, management said it remained on track to file initial “subscription model” agreements with large-load customers during 2026. These contracts are intended to make customers fund or otherwise support the generation and transmission infrastructure required to serve them.

Investors should listen for:

• Whether any agreements have been signed.
• The amount of load covered by active negotiations.
• Customer capital contributions or equipment commitments.
• Contract duration, minimum-demand protections and credit safeguards.
• Whether projects would be accretive without additional PNW equity.

PNW had also targeted August 3 for its 2026 Integrated Resource Plan filing. The earnings call should provide a useful summary of the updated load forecast, required generation mix and incremental capital opportunity—even if the formal regulatory timetable changes. (sec.gov)

7. Cholla conversion adds another growth project—and another funding question

In July, APS announced plans to convert two retired Cholla coal units to natural gas, adding approximately 380 MW. Construction is expected to begin in 2028, with operations targeted for 2029, subject to permitting and planning approvals. (aps.com)

The conversion could be economically attractive because it reuses existing land, transmission and other infrastructure. Still, investors need more detail on:

• Total project cost.
• Whether it is already included in the published capital plan.
• Expected regulatory-recovery mechanism.
• Fuel transportation arrangements.
• Whether the project supports ordinary load, subscription customers or both.
• Expected return and financing requirements.

Guidance: raise, narrow or reiterate?

A guidance increase is possible given the strong first quarter and favorable Q2 weather, but a reiteration would not necessarily be disappointing. The company may prefer to retain weather gains as protection against summer operating risks, interest expense and rate-case uncertainty.

Bullish outcome

• EPS above roughly $1.50.
• Weather-normalized sales growth of 6% or better.
• Full-year guidance raised or narrowed toward the upper half.
• Constructive rate-case commentary.
• Tangible progress on subscription contracts.
• No material increase in equity requirements.

Base-case outcome

• EPS around consensus.
• Strong C&I growth partly offset by outage, depreciation and financing costs.
• Guidance reiterated at $4.55-$4.75.
• Rate case and large-load negotiations remain on schedule but without a major new announcement.

Bearish outcome

• Reported growth depends almost entirely on weather.
• Weather-normalized sales slow materially below the annual target.
• O&M, interest or depreciation pressures accelerate.
• Management becomes more cautious about the rate case.
• Capital spending rises without customer funding or a clearer recovery mechanism.
• Additional equity needs emerge.

Questions investors should want answered

1. What was Q2 weather-normalized sales growth, particularly for large C&I customers?
2. How much did weather contribute to Q2 EPS, and how much favorable weather is now embedded in the annual outlook?
3. Is the 4%-6% 2026 sales-growth target now conservative?
4. Has the committed large-load total moved above 4.5 GW?
5. When should investors expect the first subscription-model filing?
6. What are management’s principal takeaways from the completed rate-case hearing?
7. Is PNW still confident it can earn within 50 basis points of its authorized ROE by 2029?
8. What is the expected cost and regulatory treatment of the Cholla conversion?
9. Has the capital plan changed, and are current equity-forward proceeds still sufficient?
10. Did Palo Verde’s Q2 outage remain on schedule and budget?

Bottom line

The near-term setup is favorable: Q2 weather was substantially hotter than normal, underlying load growth entered the quarter with strong momentum, and transmission investment should continue contributing.

However, an EPS beat alone may not be enough to drive the shares. The most important information will be management’s commentary on weather-normalized sales, the APS rate case, large-load contracts, capital requirements and financing.

The highest-quality result would combine solid quarterly earnings with evidence that PNW can turn Arizona’s extraordinary demand growth into contracted, timely recovered and sustainably financed earnings growth.