Pinnacle West Capital Corp (PNW)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 36.93% | 37.50% | 43.84% | 46.46% | 44.23% |
| Operating profit margin | 17.56% | 16.93% | 21.17% | 21.97% | 19.36% |
| Pretax margin | 12.32% | 12.91% | 19.16% | 17.53% | 15.05% |
| Net profit margin | 10.68% | 11.18% | 16.27% | 15.35% | 15.51% |
Pinnacle West Capital Corp.'s profitability ratios exhibit a downward trend over the past five years. The gross profit margin has shown a gradual decline from 69.97% in 2019 to 61.83% in 2023. This indicates a decrease in the company's ability to generate profit from its sales after accounting for the cost of goods sold.
Similarly, the operating profit margin has declined from 19.36% in 2019 to 17.56% in 2023, indicating a decrease in the company's ability to generate profits from its core operations. The downward trend is also evident in the pretax margin, which decreased from 15.62% in 2019 to 12.69% in 2023. This ratio reflects the company's ability to generate profits before accounting for taxes.
Finally, the net profit margin, which measures the company's profitability after all expenses, declined from 15.51% in 2019 to 10.68% in 2023. This decrease indicates a reduction in the company's bottom line profitability over the years.
Overall, the declining trend in Pinnacle West Capital Corp.'s profitability ratios suggests potential challenges in generating profits and managing costs efficiently. Further analysis and investigation may be needed to identify the root causes of this trend and implement appropriate strategies to improve the company's profitability in the future.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.34% | 3.22% | 3.66% | 3.94% | 3.64% |
| Return on assets (ROA) | 2.03% | 2.13% | 2.81% | 2.75% | 2.91% |
| Return on total capital | 6.01% | 5.31% | 6.28% | 6.60% | 6.55% |
| Return on equity (ROE) | 8.12% | 8.00% | 10.48% | 9.77% | 9.91% |
The profitability ratios of Pinnacle West Capital Corp. over the past five years exhibit a mixed performance.
1. Operating Return on Assets (Operating ROA): This ratio measures the efficiency of the company in generating operating income from its assets. The Operating ROA has fluctuated slightly over the period, ranging from 3.22% to 3.94%. This indicates that the company has been able to maintain a relatively stable level of operating profitability relative to its asset base.
2. Return on Assets (ROA): ROA shows the company's ability to generate profits from its total assets. The ROA has shown a decreasing trend from 2.91% in 2019 to 2.03% in 2023. This suggests that the company's overall profitability in relation to its assets has declined over the years.
3. Return on Total Capital: This ratio reflects the overall profitability of the company in relation to its total capital employed. Pinnacle West's Return on Total Capital has varied between 5.16% and 6.50% during the period under review. The company has managed to maintain a reasonable level of return on capital, indicating efficient utilization of the total funds invested in the business.
4. Return on Equity (ROE): ROE measures the return generated on shareholders' equity. Pinnacle West's ROE has ranged from 8.00% to 10.48% over the five-year period. The company's return on equity has shown some fluctuations but has generally remained at acceptable levels, indicating that it has been able to generate decent returns for its shareholders.
In summary, while Pinnacle West Capital Corp. has exhibited a stable operating profitability, there have been some challenges in terms of overall profitability and return on assets. However, the company has maintained a satisfactory return on total capital and return on equity, indicating effective management of capital and shareholder funds.