tapebrief
PNW · Q1 2026

PNW · Q2 2026 Earnings

Neutral

Pinnacle West Capital

Reported August 4, 2026

30-second summary

Pinnacle West posted Q2 GAAP EPS of $1.43 on revenue of $1.456B (+7.1% YoY), missing consensus of $1.47 by 2.7% while beating revenue by 4.0%, and reaffirmed FY2026 GAAP EPS guidance of $4.55–$4.75 (weather-normalized) despite the print. The substantive read: weather-normalized sales growth landed at 5.6% — squarely in the middle of the reaffirmed 4–6% FY band and a material step-down from Q1's 9.4% (7.4% adjusted) — which resolves last quarter's credibility question in management's favor and validates the refusal to raise. Total sales grew 9.6% with cooling degree-days +7% versus prior year, so weather is again contributing, but the underlying algorithm is now printing inside the guide rather than above it.

Headline numbers

EPS

Q2 FY2026

$1.43

-2.7% vs est.

Revenue

Q2 FY2026

$1.46B

+7.1% YoY

+4.0% vs est.

Operating margin

Q2 FY2026

21.0%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$1.46B$1.36B+7.1%$1.15B+26.6%
EPS$1.43$1.58-9.5%$0.27+429.6%
Operating margin21.0%22.6%-165bps11.4%+959bps

Guidance

Company reaffirmed FY2026 EPS guidance ($4.55–$4.75, weather-normalized) despite Q2 EPS miss vs consensus; revenue beat and strong operational metrics offset quarterly earnings shortfall.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

MetricPeriodGuideYoY
RevenueQ2 FY 2026$1.456B+7.1% YoY
Operating MarginQ2 FY 202621.0%—
Residential Customer GrowthQ2 FY 20262.1%—
Weather-Normalized Sales GrowthQ2 FY 20265.6%—
Total Sales GrowthQ2 FY 20269.6%—

Reaffirmed unchanged this quarter: EPS (GAAP, weather-normalized) ($4.55–$4.75)

Other KPIs

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Residential Customer Growth2.1%——
Weather-Normalized Sales Growth5.6%——
Total Sales Growth9.6%——
Residential Cooling Degree Days vs Prior Year+7%——
Operating Margin21.0%——
Customer Call Center Answer Speed75% within 30 seconds——

Management tone

No transcript was available this quarter; tone analysis is limited to press-release language.

The press release leans heavily on weather-normalized framing — "robust residential customer growth of 2.1%," "weather-normalized sales growth of 5.6%," and explicit disclosure of +7% CDDs versus prior year. This is consistent with the Q4 FY2025 → Q1 FY2026 progression where management has been actively conditioning investors to look through weather. The Q1 brief flagged that "if Q2 also runs materially above the band on weather-normalized basis, management's refusal to raise becomes a credibility question." Q2 delivered 5.6% weather-normalized — inside the band — which vindicates the framing without requiring a guide move. The reaffirmation of FY EPS in the face of a Q2 consensus miss signals management is comfortable enough with the H2 setup (rate case procedural progress, seasonal Q3 earnings weight) to hold the range rather than trim.

Answers to last quarter's watch list

Subscription-model ACC filing — Not disclosed on the press release. Without a transcript, no update on counterparty type, MW size, or filing timing.
Continue monitoring
Rate-case hearing outcome and any settlement filing — Not disclosed on the print. The May 18 hearing window has passed but the press release does not surface procedural milestones or a settlement filing.
Continue monitoring
Whether weather-normalized sales decelerate in Q2 toward the 4–6% band — Delivered: Q2 weather-normalized sales came in at 5.6%, at the midpoint of the 4–6% FY guide, a clean deceleration from Q1's 9.4% (7.4% adjusted). The credibility question is answered in management's favor.
Resolved positively
Mid-year IRP refresh — Not called out in the press release.
Continue monitoring
All-Source RFP final awards — Not disclosed on the print.
Continue monitoring
Cholla gas-conversion analysis — Not addressed in the press release.
Continue monitoring

What to watch into next quarter

Rate-case procedural status post-May hearings — with hearings now behind, the Q3 print or intervening 8-Ks should surface staff/intervener positioning on the formula rate and large-customer rate design. Watch for any settlement filing or procedural schedule for a commission decision.

First subscription-model ACC filing — management committed to "this year" as of Q4 FY2025 and Q1 FY2026. If Q3 passes without a filing, the timing commitment slips, which weakens the 20GW-queue conversion narrative.

Q3 EPS versus the implied FY landing — H1 GAAP EPS is $1.70 (Q1 $0.27 + Q2 $1.43); the FY $4.55–$4.75 guide implies Q3+Q4 of $2.85–$3.05. Q3 is seasonally the heaviest earnings quarter (delivered $3.39 in Q3 FY2025 on a raised base). Watch whether Q3 lands strong enough to preserve the FY range or force a mid-year revision.

EPS miss decomposition — with revenue beating and margin holding, the sources of the 4-cent shortfall versus consensus (interest expense, O&M timing, El Dorado, tax) matter for reading Q3/Q4 setup. The 10-Q or next call should clarify.

Mid-year IRP refresh filing — flagged in Q1 for "later this summer" as the forcing function for rate-base trajectory disclosure. Watch for filing timing and the 10–15-year generation/transmission build quantification.

Weather-normalized sales trajectory in Q3 — Q1 9.4% → Q2 5.6% suggests reversion to the 4–6% band. If Q3 prints below the band, the underlying algorithm weakens; if it holds mid-band, the FY guide holds mechanically.

Sources

  1. Pinnacle West Capital Q2 FY2026 earnings press release (8-K Exhibit 99.1): https://www.sec.gov/Archives/edgar/data/764622/000076462226000040/a8-kpnw063026exhibit991.htm

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