DCF Studio

    PNW · NYQ · Utilities

    Pinnacle West Capital Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -17.97

    Market price

    USD 105.95

    Implied upside

    -117.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 43.0% of revenue against depreciation of 18.5%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD -17.97-117.0%
    Exit multiple
    USD 72.32-31.7%
    Market price
    USD 105.95

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -492m151m795mFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 5.5bnUSD 5.9bnUSD 6.3bnUSD 6.7bnUSD 7.0bnUSD 7.4bnUSD 7.7bnUSD 8.0bnUSD 8.2bnUSD 8.4bn+4.8%
    EBITUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+4.8%
    NOPATUSD 888.2mUSD 950.5mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bn+4.8%
    Add depreciation & amortisationUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+4.8%
    Less capital expenditureUSD -2.4bnUSD -2.4bnUSD -2.5bnUSD -2.5bnUSD -2.5bnUSD -2.4bnUSD -2.4bnUSD -2.3bnUSD -2.2bnUSD -2.1bn-1.5%
    Capex, % of revenue43.0%40.9%38.9%36.9%34.9%32.9%30.8%28.8%26.8%24.8%-
    Less increase in working capitalUSD -22.4mUSD -41.9mUSD -41.2mUSD -40.1mUSD -38.3mUSD -36.1mUSD -33.3mUSD -30.1mUSD -26.3mUSD -22.1m-0.1%
    Free cashflow to firmUSD -492.4mUSD -425.1mUSD -321.5mUSD -201.8mUSD -66.4mUSD 83.6mUSD 246.8mUSD 421.2mUSD 604.7mUSD 794.7m-
    Discount factor0.96970.91190.85760.80640.75840.71320.67060.63070.59310.5577-
    Present valueUSD -477.5mUSD -387.6mUSD -275.7mUSD -162.7mUSD -50.3mUSD 59.6mUSD 165.5mUSD 265.6mUSD 358.6mUSD 443.2m-
    Present Value Of The ForecastUSD -61.3m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.647Reported 0.473, pulled toward 1.0 (Blume)
    Cost of equity7.63%Risk-free + beta x equity risk premium
    Cost of debt6.00%Risk-free + 111bp, the spread for a BBB rating at 2.5x interest cover. Book interest / average debt was lower, at 3.3%.
    Market capitalisationUSD 12.8bn47.3% of capital
    Total debtUSD 14.3bn52.7% of capital, book value as a proxy
    Tax rate13.7%Effective, capped at statutory
    WACC6.34%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD -17.97

    101% of EV

    Forecast FCFF, final year
    USD 794.7m
    Capex at depreciation, working capital in reinvestment
    USD 1.3bn
    Less reinvestment at g/ROIC (39.4% of NOPAT)
    USD -531.9m
    Capitalised
    USD 816.8m
    ROIC (WACC floor)
    6.3%
    Terminal value, undiscounted
    USD 21.8bn
    Terminal value, discounted
    USD 12.2bn
    Enterprise value
    USD 12.1bn
    Less net debt
    USD 14.3bn
    Equity value
    USD -2.2bn

    Exit at 13.3x EBITDA

    Value per shareUSD 72.32

    100% of EV

    Terminal value, undiscounted
    USD 41.6bn
    Terminal value, discounted
    USD 23.2bn
    Enterprise value
    USD 23.1bn
    Less net debt
    USD 14.3bn
    Equity value
    USD 8.8bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.34%71.3175.4683.5299.90139.44
    5.34%15.2512.579.887.204.52
    6.34%-13.71-15.84-17.97-20.11-22.24
    7.34%-34.35-36.08-37.82-39.56-41.30
    8.34%-49.68-51.13-52.58-54.02-55.47

    Outlined: this model. Green text: above today's price of 105.95. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year7.3%4.7%13.3%
    EBIT margin20.0%18.6%33.4%
    Discount rate-6.3%4.2%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.