Key Insights
- The projected fair value for Pinnacle West Capital is US$89.64 based on Dividend Discount Model
- With US$89.32 share price, Pinnacle West Capital appears to be trading close to its estimated fair value
- Our fair value estimate is 7.1% lower than Pinnacle West Capital’s analyst price target of US$96.54
Today we will run through one way of estimating the intrinsic value of Pinnacle West Capital Corporation (NYSE:PNW) by taking the expected future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Don’t get put off by the jargon, the math behind it is actually quite straightforward.
We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in…
