Is Pinnacle West Capital Corp. overvalued or undervalued?

As of 29 January 2025, the valuation grade for Pinnacle West Capital Corp. has moved from fair to expensive, indicating that the company is currently overvalued. The P/E ratio stands at 21, while the industry average P/E is significantly lower, with peers such as Vistra Corp. at 17.23 and Ameren Corp. at 21.78. Additionally, Pinnacle West's EV to EBITDA ratio is 10.75, which is higher than Vistra's 8.24, further supporting the conclusion of overvaluation.
Key financial ratios for Pinnacle West include a Price to Book Value of 1.58 and a ROE of 7.58%. Compared to its peers, the company's financial metrics suggest that it is not providing sufficient returns relative to its price, reinforcing the assessment of being overvalued. While Pinnacle West has outperformed the S&P 500 in the past year with a return of 20.16% compared to the index's 10.26%, this does not alter the valuation perspective based on current ratios and peer comparisons.