A Deep Dive into the Performance of Pinnacle West vs. NextEera Energy: A Comparative Analysis
In our previous article, we made a recommendation for investors to consider Pinnacle West (PNW) over NextEra Energy (NEE) based on several factors. Now, it’s time to review how that trade has performed and examine the Q4-2024 results for NextEra Energy, updating our outlook accordingly.
Comparing the Performance of Pinnacle West and NextEra Energy
Since our initial recommendation, Pinnacle West’s stock has shown a steady growth, with a return on investment (ROI) of approximately 6.5%, while NextEra Energy’s stock has experienced a modest growth of about 3.5%. This difference in performance can be attributed to various factors such as:
- Dividend Yield: Pinnacle West’s dividend yield currently stands at around 3.8%, which is higher than NextEra Energy’s yield of approximately 2.4%.
- Earnings Per Share (EPS): Pinnacle West’s EPS has seen a more significant increase, growing from $3.50 in 2020 to an estimated $4.25 in 2024, compared to NextEra Energy’s EPS growth from $6.45 in 2020 to an estimated $7.60 in 2024.
- Price-to-Earnings Ratio (P/E): Pinnacle West’s P/E ratio is lower than NextEra Energy’s, indicating that Pinnacle West might be undervalued compared to NextEra Energy.
NextEra Energy’s Q4-2024 Results and Updated Outlook
NextEra Energy reported Q4-2024 earnings that slightly surpassed analysts’ expectations, with earnings per share coming in at $1.82 compared to the estimated $1.80. However, the overall revenue growth was lower than anticipated, which led to a slight dip in the stock price. This dip, coupled with the lower dividend yield, might make NextEra Energy a less attractive option for investors compared to Pinnacle West.
Impact on Individual Investors
For individual investors, the performance of Pinnacle West over NextEra Energy could mean higher returns on their investment. The higher dividend yield, lower P/E ratio, and more significant EPS growth make Pinnacle West a potentially more lucrative investment choice. However, it’s essential to remember that past performance is not always indicative of future results and that diversification is key to a balanced investment portfolio.
Global Implications
On a larger scale, the outperformance of Pinnacle West over NextEra Energy could have implications for the overall energy sector. This trend might attract more investors to utility stocks with higher dividend yields and lower P/E ratios, potentially increasing demand and further driving up the stock prices of companies like Pinnacle West. Additionally, the continued growth of utility companies could indicate a shift towards renewable energy sources and a more sustainable energy future.
Conclusion
In conclusion, our analysis of the performance of Pinnacle West and NextEra Energy since our initial recommendation shows that Pinnacle West has outperformed NextEra Energy in terms of dividend yield, EPS growth, and P/E ratio. NextEra Energy’s Q4-2024 results, while not disappointing, did not meet expectations, further solidifying Pinnacle West’s position as a potentially more attractive investment opportunity. However, it’s crucial for investors to remember that past performance is not a guarantee of future results and to maintain a diversified investment portfolio.
On a global scale, the outperformance of Pinnacle West could have implications for the energy sector as a whole, potentially attracting more investors to utility stocks with higher dividend yields and lower P/E ratios. This trend could further drive up the stock prices of these companies and indicate a continued shift towards renewable energy sources and a more sustainable energy future.
