Southern (NYSE:SO) - Share price, News & Analysis

Q: What is the Fair Price of SO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

SO ($74.99) is trading below our estimate of [[fair value]] ($155.68)

SO fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	1/6
Past Performance	2/6
Financial Health	1/6
Dividends	3/6

SO Stock Overview

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity.

Rewards

Trading at 51.8% below our estimate of its fair value

Earnings are forecast to grow 7.78% per year

Risk Analysis

Interest payments are not well covered by earnings

Dividend of 3.63% is not well covered by earnings or cash flows

Southern Competitors

Duke Energy

NYSE:DUK

US$79.9b

American Electric Power Company

NasdaqGS:AEP

US$50.2b

Xcel Energy

NasdaqGS:XEL

US$39.1b

Exelon

NasdaqGS:EXC

US$41.4b

Price History & Performance

Summary of all time highs, changes and price drops for Southern
Historical stock prices
Current Share Price	US$74.99
52 Week High	US$80.57
52 Week Low	US$60.99
Beta	0.50
1 Month Change	-5.22%
3 Month Change	7.39%
1 Year Change	18.73%
3 Year Change	21.40%
5 Year Change	52.61%
Change since IPO	414.95%

Recent News & Updates

Sep 05

What Makes Southern Company's High Yield So Special

Summary Southern Company is doing very well as it moves closer to the completion of nuclear unit Vogtle 3 in early 2023. As both Vogtle 3 and 4 are close to completion, Southern Company is in a good spot to accelerate EPS growth, reduce leverage, and improve shareholder distributions. The company has a decent yield, very consistent dividend growth, and a healthy balance sheet. The stock remains a top pick for income-oriented investors as well as everyone looking to add some low-volatility yield.

Aug 23

These 4 Measures Indicate That Southern (NYSE:SO) Is Using Debt Extensively

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...

Aug 10

The Southern Company's (NYSE:SO) Intrinsic Value Is Potentially 99% Above Its Share Price

Today we will run through one way of estimating the intrinsic value of The Southern Company ( NYSE:SO ) by taking the...

Shareholder Returns

	SO	US Electric Utilities	US Market
7D	-2.9%	-3.0%	-5.2%
1Y	18.7%	5.8%	-23.0%

Return vs Industry: SO exceeded the US Electric Utilities industry which returned 5.8% over the past year.

Return vs Market: SO exceeded the US Market which returned -23.1% over the past year.

Price Volatility

Is SO's price volatile compared to industry and market?
SO volatility
SO Average Weekly Movement	2.8%
Electric Utilities Industry Average Movement	3.0%
Market Average Movement	6.9%
10% most volatile stocks in US Market	15.8%
10% least volatile stocks in US Market	2.8%

Stable Share Price: SO is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: SO's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1945	27,164	Tom Fanning	https://www.southerncompany.com

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates through Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services segments. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations.

Southern Fundamentals Summary

How do Southern's earnings and revenue compare to its market cap?
SO fundamental statistics
Market Cap	US$79.71b
Earnings (TTM)	US$3.02b
Revenue (TTM)	US$25.86b

26.4x

P/E Ratio

3.1x

P/S Ratio

Is SO overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SO income statement (TTM)
Revenue	US$25.86b
Cost of Revenue	US$15.39b
Gross Profit	US$10.47b
Other Expenses	US$7.44b
Earnings	US$3.02b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	2.84
Gross Margin	40.47%
Net Profit Margin	11.69%
Debt/Equity Ratio	165.3%

How did SO perform over the long term?

See historical performance and comparison

Dividends

3.6%

Current Dividend Yield

94%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is SO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SO?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SO. This is calculated by dividing SO's market cap by their current preferred multiple.
What is SO's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$79.71b

SO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	5.4x
Enterprise Value/EBITDA	15.6x
PEG Ratio	3.4x

Price to Earnings Ratio vs Peers

How does SO's PE Ratio compare to its peers?

SO PE Ratio vs Peers

The above table shows the PE ratio for SO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	21.6x
DUK Duke Energy	21x	7.5%	US$79.9b
AEP American Electric Power Company	19.5x	7.8%	US$50.2b
XEL Xcel Energy	24x	6.7%	US$39.1b
EXC Exelon	21.8x	8.6%	US$41.4b
SO Southern	26.4x	7.8%	US$79.7b

Price-To-Earnings vs Peers: SO is expensive based on its Price-To-Earnings Ratio (26.4x) compared to the peer average (21.6x).

Price to Earnings Ratio vs Industry

How does SO's PE Ratio compare vs other companies in the US Electric Utilities Industry?

Price-To-Earnings vs Industry: SO is expensive based on its Price-To-Earnings Ratio (26.4x) compared to the US Electric Utilities industry average (19.5x)

Price to Earnings Ratio vs Fair Ratio

What is SO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	26.4x
Fair PE Ratio	24.9x

Price-To-Earnings vs Fair Ratio: SO is expensive based on its Price-To-Earnings Ratio (26.4x) compared to the estimated Fair Price-To-Earnings Ratio (24.9x).

Share Price vs Fair Value

What is the Fair Price of SO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SO ($74.99) is trading below our estimate of fair value ($155.68)

Significantly Below Fair Value: SO is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

Discover undervalued companies

Future Growth

How is Southern forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

7.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SO's forecast earnings growth (7.8% per year) is above the savings rate (1.9%).

Earnings vs Market: SO's earnings (7.8% per year) are forecast to grow slower than the US market (14.7% per year).

High Growth Earnings: SO's earnings are forecast to grow, but not significantly.

Revenue vs Market: SO's revenue (2.6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: SO's revenue (2.6% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: SO's Return on Equity is forecast to be low in 3 years time (14.3%).

Discover growth companies

Past Performance

How has Southern performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

14.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SO has high quality earnings.

Growing Profit Margin: SO's current net profit margins (11.7%) are lower than last year (14.4%).

Past Earnings Growth Analysis

Earnings Trend: SO's earnings have grown by 14.1% per year over the past 5 years.

Accelerating Growth: SO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SO had negative earnings growth (-3.9%) over the past year, making it difficult to compare to the Electric Utilities industry average (10.1%).

Return on Equity

High ROE: SO's Return on Equity (8.7%) is considered low.

Discover strong past performing companies

Financial Health

How is Southern's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: SO's short term assets ($9.8B) do not cover its short term liabilities ($11.5B).

Long Term Liabilities: SO's short term assets ($9.8B) do not cover its long term liabilities ($86.0B).

Debt to Equity History and Analysis

Debt Level: SO's net debt to equity ratio (160.1%) is considered high.

Reducing Debt: SO's debt to equity ratio has reduced from 196.8% to 165.3% over the past 5 years.

Debt Coverage: SO's debt is not well covered by operating cash flow (12.4%).

Interest Coverage: SO's interest payments on its debt are not well covered by EBIT (2.6x coverage).

Balance Sheet

Discover healthy companies

Dividend

What is Southern current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

3.63%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: SO's dividend (3.63%) is higher than the bottom 25% of dividend payers in the US market (1.65%).

High Dividend: SO's dividend (3.63%) is low compared to the top 25% of dividend payers in the US market (4.57%).

Stability and Growth of Payments

Stable Dividend: SO's dividends per share have been stable in the past 10 years.

Growing Dividend: SO's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (93.5%), SO's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: SO is paying a dividend but the company has no free cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

8.5yrs

Average management tenure

CEO

Tom Fanning (65 yo)

12.08yrs

Tenure

US$21,243,559

Compensation

Mr. Thomas A. Fanning, also known as Tom, has been the Chairman and Chief Executive Officer of The Southern Company since December 1, 2010 and its President of Southern Company since August 1, 2010. He ser...

CEO Compensation Analysis

Compensation vs Market: Tom's total compensation ($USD21.24M) is above average for companies of similar size in the US market ($USD13.05M).

Compensation vs Earnings: Tom's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: SO's management team is seasoned and experienced (8.5 years average tenure).

Board Members

Experienced Board: SO's board of directors are considered experienced (9.1 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

NYSE:SO Recent Insider Transactions by Companies or Individuals
Date	Value	Name	Entity	Shares	Max Price
04 Mar 22	SellUS$506,025	Ann Daiss	Individual	7,500	US$67.47
23 Feb 22	SellUS$57,821	Christopher Cummiskey	Individual	909	US$63.61
10 Nov 21	SellUS$149,507	Daniel Tucker	Individual	2,350	US$63.62

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Top Shareholders

Top 25 shareholders own 45.96% of the company

Ownership	Name	Shares	Current Value	Change %	Portfolio %
8.77%	The Vanguard Group, Inc.	93,260,760	$7.0b	1.76%	0.16%
7.12%	BlackRock, Inc.	75,637,432	$5.7b	8.78%	0.14%
6%	State Street Global Advisors, Inc.	63,755,513	$4.8b	1.68%	0.26%
5.58%	T. Rowe Price Group, Inc.	59,348,519	$4.5b	3.45%	0.52%
2.66%	Massachusetts Financial Services Company	28,272,264	$2.1b	-3.49%	0.55%
2.55%	FMR LLC	27,068,060	$2.0b	7.67%	0.19%
1.72%	Geode Capital Management, LLC	18,278,734	$1.4b	3.98%	0.18%
1.54%	Franklin Resources, Inc.	16,324,829	$1.2b	-30.81%	0.52%
1.12%	Northern Trust Global Investments	11,895,604	$892.1m	6.91%	0.18%
1.07%	Capital Research and Management Company	11,405,289	$855.3m	0.01%	0.06%
0.93%	Legal & General Investment Management Limited	9,924,668	$744.3m	-0.06%	0.22%
0.8%	BNY Mellon Asset Management	8,523,379	$639.2m	10.33%	0.14%
0.74%	Strategic Advisers LLC	7,849,002	$588.6m	9.12%	0.49%
0.73%	California Public Employees' Retirement System	7,773,673	$582.9m	-1.78%	0.54%
0.52%	Charles Schwab Investment Management, Inc.	5,478,270	$410.8m	0.47%	0.11%
0.49%	Federated Hermes, Inc.	5,213,696	$391.0m	-5.24%	1.17%
0.44%	Invesco Capital Management LLC	4,711,141	$353.3m	-9.5%	0.27%
0.43%	Swiss National Bank, Asset Management Arm	4,599,147	$344.9m	0.19%	0.23%
0.43%	Morgan Stanley, Investment Banking and Brokerage Investments	4,598,605	$344.8m	-3.71%	0.07%
0.42%	UBS Asset Management	4,497,154	$337.2m	-4.19%	0.06%
0.42%	Managed Account Advisors LLC	4,481,838	$336.1m	-0.84%	0.09%
0.38%	Eaton Vance Management	4,005,910	$300.4m	5.31%	0.11%
0.37%	Pictet Asset Management Limited	3,908,636	$293.1m	1.64%	0.26%
0.37%	Norges Bank Investment Management	3,908,316	$293.1m	0%	0.04%
0.37%	Goldman Sachs Asset Management, L.P.	3,880,891	$291.0m	3.01%	0.12%

Ticker	Exchange	Primary Security	Security Type	Country	Currency	Listed on
SO	NYSE (New York Stock Exchange)	Yes	Common Stock	US	USD	Jan 1968
SOT	DB (Deutsche Boerse AG)	Yes	Common Stock	DE	EUR	Jan 1968
0L8A	LSE (London Stock Exchange)	Yes	Common Stock	GB	USD	Jan 1968
SOT	ETLX (Eurotlx)	Yes	Common Stock	IT	EUR	Jan 1968
SOUT	WBAG (Wiener Boerse AG)	Yes	Common Stock	AT	EUR	Jan 1968
SO *	BMV (Bolsa Mexicana de Valores)	Yes	Common Stock	MX	MXN	Jan 1968
T1SO34	BOVESPA (Bolsa de Valores de Sao Paulo)		BDR EACH REPR 1 COM	BR	BRL	Dec 2019

Data	Last Updated (UTC time)
Company Analysis	2022/09/24 00:00
End of Day Share Price	2022/09/23 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31