Pacific Gas & Electric Co. (PCG) and Pinnacle West Capital Corporation (PNW) are two major players in the regulated electric utilities sector, serving California and Arizona respectively. Both companies operate extensive generation and distribution networks and emphasize innovation in clean energy and infrastructure modernization. This article compares their market positions and growth strategies to help you identify the most compelling investment opportunity in this essential industry.
Table of contents
Companies Overview
I will begin the comparison between Pacific Gas & Electric Co. and Pinnacle West Capital Corporation by providing an overview of these two companies and their main differences.
Pacific Gas & Electric Co. Overview
Pacific Gas & Electric Co. is a major utility company serving northern and central California. It generates, transmits, distributes, and sells electricity and natural gas using diverse sources such as nuclear, hydroelectric, fossil fuels, and solar. The company also innovates with products like a personal microgrid backup power transfer meter integrated with its SmartMeter system. It operates as a subsidiary of PG&E Corporation and employs around 28,410 people.
Pinnacle West Capital Corporation Overview
Pinnacle West Capital Corporation operates primarily in Arizona through its subsidiary Arizona Public Service Company. It provides retail and wholesale electric services, generating electricity from coal, nuclear, gas, oil, and solar sources. The company maintains extensive transmission and distribution infrastructure and serves about 1.3M customers. Founded in 1985, it employs roughly 6,400 staff and owns or leases 6,323 MW of regulated generation capacity.
Key similarities and differences
Both companies operate in the regulated electric utilities sector, focusing on generating, transmitting, and distributing electricity with a mix of traditional and renewable energy sources. PG&E is larger in scale, with a broader customer base and workforce, while Pinnacle West is more regionally concentrated in Arizona. Pinnacle West also maintains more extensive infrastructure data in terms of miles of lines and substations, reflecting its operational footprint and capacity management.
Income Statement Comparison
The table below compares key income statement metrics for Pacific Gas & Electric Co. and Pinnacle West Capital Corporation for the fiscal year 2024.
| Metric | Pacific Gas & Electric Co. (PCG) | Pinnacle West Capital Corporation (PNW) |
|---|---|---|
| Market Cap | 34.8B | 10.7B |
| Revenue | 24.4B | 5.1B |
| EBITDA | 9.9B | 2.1B |
| EBIT | 5.4B | 1.1B |
| Net Income | 2.5B | 609M |
| EPS | 1.16 | 5.35 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
Pacific Gas & Electric Co.
Pacific Gas & Electric Co. showed steady revenue growth of 32.22% over 2020-2024, with net income increasing sharply by 292.64%. Margins improved significantly, with a gross margin at 37.5% and net margin rising to 10.29%. In 2024, revenue slightly declined by 0.04%, but gross profit and EBIT surged, indicating margin expansion and profitability gains despite flat sales.
Pinnacle West Capital Corporation
Pinnacle West Capital Corporation experienced solid revenue growth of 42.88% from 2020 to 2024, with net income up by 10.58%. Gross and EBIT margins remained favorable at 41.7% and 21.74%, respectively, although net margin was higher at 11.88%. The latest year saw a 9.13% revenue increase and positive net margin growth, although operating expenses rose proportionally, impacting margin expansion.
Which one has the stronger fundamentals?
Both companies present favorable income statement evaluations with strong gross and EBIT margins. Pacific Gas & Electric Co. leads in net income growth and margin improvement overall, despite a slight revenue dip in the latest year and higher interest expense. Pinnacle West shows steadier revenue growth and better net margin but weaker net margin growth over the period. Pacific Gas & Electric’s rapid profit gains contrast with Pinnacle West’s more moderate income expansion and expense pressures.
Financial Ratios Comparison
The table below presents a comparison of key financial ratios for Pacific Gas & Electric Co. (PCG) and Pinnacle West Capital Corporation (PNW) based on their most recent fiscal year data (2024).
| Ratios | Pacific Gas & Electric Co. (PCG) | Pinnacle West Capital Corporation (PNW) |
|---|---|---|
| ROE | 8.33% | 9.01% |
| ROIC | 3.98% | 3.48% |
| P/E | 17.20 | 15.85 |
| P/B | 1.43 | 1.43 |
| Current Ratio | 1.05 | 0.59 |
| Quick Ratio | 1.00 | 0.42 |
| D/E (Debt-to-Equity) | 1.94 | 1.64 |
| Debt-to-Assets | 43.7% | 42.3% |
| Interest Coverage | 1.46 | 2.68 |
| Asset Turnover | 0.18 | 0.20 |
| Fixed Asset Turnover | 0.28 | 0.25 |
| Payout ratio | 3.42% | 64.83% |
| Dividend yield | 0.20% | 4.09% |
Interpretation of the Ratios
Pacific Gas & Electric Co.
Pacific Gas & Electric Co. shows mixed ratio strength with a favorable net margin of 10.29% but weaker returns on equity (8.33%) and on invested capital (3.98%). Leverage is relatively high with a debt-to-equity ratio of 1.94 and low interest coverage of 1.76, indicating risk. The dividend yield is modest at 0.2%, suggesting limited shareholder returns through dividends.
Pinnacle West Capital Corporation
Pinnacle West Capital Corporation reports a slightly better net margin of 11.88% but also faces challenges with a 9.01% return on equity and 3.48% return on invested capital. Liquidity ratios are weak, with a current ratio of 0.59 and quick ratio of 0.42. The dividend yield stands out at 4.09%, providing stronger income to shareholders compared to its peer.
Which one has the best ratios?
Both companies face significant unfavorable ratios, particularly regarding returns and liquidity, leading to a broadly slightly unfavorable profile. Pinnacle West offers a higher dividend yield, while Pacific Gas & Electric has marginally better liquidity ratios. Neither company shows a clear overall advantage, as strengths in one area are offset by weaknesses in others.
Strategic Positioning
This section compares the strategic positioning of Pacific Gas & Electric Co. (PCG) and Pinnacle West Capital Corporation (PNW) regarding Market position, Key segments, and disruption:
Pacific Gas & Electric Co.
- Leading regulated electric utility in California, facing typical competitive pressures of regional monopoly.
- Revenue driven mainly by electricity and natural gas distribution to residential, commercial, and industrial customers.
- Invests in smart grid technologies with microgrid backup power, integrating renewable energy sources.
Pinnacle West Capital Corporation
- Regulated electric utility primarily serving Arizona, operating under similar regulated market pressures.
- Revenue sourced chiefly from electric service, transmission, and wholesale energy sales to about 1.3M customers.
- Utilizes coal, nuclear, gas, oil, and solar generation, maintaining extensive transmission and distribution infrastructure.
Pacific Gas & Electric Co. vs Pinnacle West Capital Corporation Positioning
PCG operates a more diversified energy mix including natural gas and innovative smart grid solutions, while PNW focuses on electric generation with a broad mix of fuel sources and a large regulated customer base. PCG’s geographic concentration is California, PNW is Arizona, presenting distinct regional market dynamics.
Which has the best competitive advantage?
Both companies are currently shedding value, but PCG shows a growing ROIC trend, indicating improving profitability. PNW faces declining ROIC and very unfavorable moat status, suggesting a weaker competitive advantage in the recent period.
Stock Comparison
The stock price movements over the past year reveal contrasting trends for Pacific Gas & Electric Co. (PCG) and Pinnacle West Capital Corporation (PNW), with PCG experiencing a modest decline and PNW showing significant gains before recent easing.
Trend Analysis
Pacific Gas & Electric Co. (PCG) exhibited a bearish trend with a -3.53% price change over the past year, accompanied by deceleration and a price range between 13.42 and 21.63. The recent trend confirms a mild decline of -3.35%.
Pinnacle West Capital Corporation (PNW) demonstrated a bullish trend with a 31.14% price increase over the past year, despite deceleration and higher volatility. Recent months show a slight reversal with a -3.31% drop.
Comparing the two, PNW delivered the highest market performance with a strong positive trend, while PCG’s stock price declined modestly over the analyzed period.
Target Prices
Analysts present a clear consensus on target prices for Pacific Gas & Electric Co. and Pinnacle West Capital Corporation.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Pacific Gas & Electric Co. | 25 | 18 | 21.5 |
| Pinnacle West Capital Corp. | 115 | 85 | 96.33 |
The consensus targets for PCG and PNW both exceed current prices, suggesting moderate upside potential for investors compared to their recent trading levels.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Pacific Gas & Electric Co. (PCG) and Pinnacle West Capital Corporation (PNW):
Rating Comparison
PCG Rating
- Rating: B-, considered very favorable by analysts.
- Discounted Cash Flow Score: 1, rated very unfavorable.
- ROE Score: 3, indicating moderate efficiency in equity.
- ROA Score: 3, indicating moderate asset utilization.
- Debt To Equity Score: 1, considered very unfavorable.
- Overall Score: 3, reflecting a moderate overall rating.
PNW Rating
- Rating: C+, also considered very favorable by analysts.
- Discounted Cash Flow Score: 1, rated very unfavorable.
- ROE Score: 3, indicating moderate efficiency in equity.
- ROA Score: 3, indicating moderate asset utilization.
- Debt To Equity Score: 1, considered very unfavorable.
- Overall Score: 2, reflecting a moderate overall rating.
Which one is the best rated?
Based strictly on the provided data, PCG holds a higher overall rating (B-) and score (3) compared to PNW’s rating (C+) and score (2), indicating PCG is better rated by analysts.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for Pacific Gas & Electric Co. and Pinnacle West Capital Corporation:
PCG Scores
- Altman Z-Score: 0.48, in distress zone, high bankruptcy risk
- Piotroski Score: 5, average financial strength
PNW Scores
- Altman Z-Score: 0.73, in distress zone, high bankruptcy risk
- Piotroski Score: 4, average financial strength
Which company has the best scores?
Both PCG and PNW are in the distress zone according to their Altman Z-Scores, indicating high bankruptcy risk. PCG has a slightly higher Piotroski Score (5 vs. 4), but both remain in the average range.
Grades Comparison
Here is a comparison of the latest grades and ratings for Pacific Gas & Electric Co. and Pinnacle West Capital Corporation:
Pacific Gas & Electric Co. Grades
The following table summarizes recent grades assigned by reputable grading companies for Pacific Gas & Electric Co.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | Maintain | Overweight | 2025-12-12 |
| UBS | Maintain | Neutral | 2025-10-24 |
| Jefferies | Maintain | Buy | 2025-10-22 |
| BMO Capital | Maintain | Outperform | 2025-10-14 |
| Jefferies | Maintain | Buy | 2025-10-03 |
| Barclays | Maintain | Overweight | 2025-10-01 |
| Morgan Stanley | Maintain | Equal Weight | 2025-09-25 |
| Morgan Stanley | Upgrade | Equal Weight | 2025-09-18 |
| UBS | Maintain | Neutral | 2025-09-18 |
| Barclays | Maintain | Overweight | 2025-07-22 |
Overall, Pacific Gas & Electric Co. has consistently received positive to neutral grades, with multiple “Buy,” “Outperform,” and “Overweight” ratings maintained over the last year.
Pinnacle West Capital Corporation Grades
The table below shows recent grades from established grading companies for Pinnacle West Capital Corporation:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Neutral | 2025-12-17 |
| Keybanc | Downgrade | Sector Weight | 2025-12-12 |
| Keybanc | Maintain | Overweight | 2025-10-15 |
| UBS | Maintain | Neutral | 2025-10-10 |
| Barclays | Maintain | Equal Weight | 2025-10-07 |
| Argus Research | Maintain | Buy | 2025-09-30 |
| Morgan Stanley | Maintain | Equal Weight | 2025-09-25 |
| UBS | Maintain | Neutral | 2025-09-12 |
| Mizuho | Downgrade | Neutral | 2025-09-09 |
| Barclays | Maintain | Equal Weight | 2025-08-13 |
Pinnacle West Capital Corporation’s grades exhibit a more neutral to cautious stance, with several “Neutral,” “Equal Weight,” and one downgrade to “Sector Weight,” balanced by a single “Buy” rating.
Which company has the best grades?
Pacific Gas & Electric Co. has received generally stronger grades, including more “Buy” and “Outperform” ratings, compared to Pinnacle West Capital Corporation’s mostly neutral and equal weight evaluations. This difference may influence investors seeking more positive analyst sentiment.
Strengths and Weaknesses
Below is a comparison of key strengths and weaknesses for Pacific Gas & Electric Co. (PCG) and Pinnacle West Capital Corporation (PNW) based on their latest financial and operational data.
| Criterion | Pacific Gas & Electric Co. (PCG) | Pinnacle West Capital Corporation (PNW) |
|---|---|---|
| Diversification | Moderate diversification: Electricity $18.6B, Natural Gas $6.6B (2024) | Less diversified: Mainly Electric Service $2.56B (2024) with smaller segments |
| Profitability | Net margin 10.29% (favorable), ROIC 3.98% (unfavorable), ROE 8.33% (unfavorable) | Net margin 11.88% (favorable), ROIC 3.48% (unfavorable), ROE 9.01% (unfavorable) |
| Innovation | Limited evidence of innovation focus; growing ROIC trend (+26.7%) | Declining ROIC trend (-5.1%), indicating challenges in profitability improvement |
| Global presence | Primarily US-regulated utility, focused on California | US-regulated utility, focused on Arizona region |
| Market Share | Large regional utility with significant electricity and gas market share | Smaller regional utility with concentrated electricity market share |
Key takeaways: Both PCG and PNW operate primarily as regional utilities with stable but limited diversification. PCG shows a growing profitability trend despite current value destruction, while PNW faces declining profitability. Both companies exhibit mixed financial metrics, advising cautious investment consideration with focus on risk management.
Risk Analysis
Below is a comparative overview of the main risks associated with Pacific Gas & Electric Co. (PCG) and Pinnacle West Capital Corporation (PNW) as of 2026.
| Metric | Pacific Gas & Electric Co. (PCG) | Pinnacle West Capital Corporation (PNW) |
|---|---|---|
| Market Risk | Moderate due to regulated utility sector and low beta (0.38) | Moderate with slightly higher beta (0.54) in regulated utilities |
| Debt level | High debt-to-equity ratio (~1.94), interest coverage low (1.76) | High debt-to-equity ratio (~1.64), better interest coverage (2.95) |
| Regulatory Risk | Significant given California’s strict energy regulations and wildfire liabilities | Moderate regulatory risks under Arizona jurisdiction |
| Operational Risk | Exposure to operational disruptions in aging infrastructure | Operational complexity with large grid and generation assets |
| Environmental Risk | High due to wildfire liabilities and transition to clean energy | Moderate, with coal and nuclear plant operations impacting ESG profile |
| Geopolitical Risk | Low, domestic US operations | Low, domestic US operations |
The most impactful risks for both companies lie in their high debt levels and regulatory environments. PCG faces more acute regulatory and environmental risks, particularly wildfire-related liabilities in California, raising bankruptcy concerns as reflected by their low Altman Z-scores (<1). PNW shows similar financial distress signals but benefits from slightly better operational and regulatory stability. Caution is advised given these risks and moderate financial health indicators.
Which Stock to Choose?
Pacific Gas & Electric Co. (PCG) shows a favorable income statement with strong growth in net income (+293%) and EPS (+210%) over 2020-2024, despite a slight 1-year revenue decline. Its financial ratios are slightly unfavorable, with weak ROE (8.33%) and ROIC (3.98%), moderate debt levels, and a B- rating. The company’s ROIC trend is growing but remains below WACC, indicating value destruction.
Pinnacle West Capital Corporation (PNW) posts a favorable income statement with solid revenue growth (+43%) and positive EPS growth (+7.6%) over 2020-2024, alongside a 9% revenue increase in the last year. Its financial ratios are also slightly unfavorable, with moderate ROE (9.01%) and ROIC (3.48%), comparable debt, and a C+ rating. However, its ROIC shows a declining trend, signaling increasing value destruction.
Investors focused on growth might find PCG’s improving profitability and income growth attractive despite its financial weaknesses, while those emphasizing stability could view PNW’s consistent revenue growth and higher dividend yield as more favorable, albeit with a declining profitability trend. Both companies carry risks related to value creation and financial health.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Pacific Gas & Electric Co. and Pinnacle West Capital Corporation to enhance your investment decisions:
