NYSE:SO

Stock Analysis Report

Executive Summary

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

Rewards

Trading at 17.9% below its fair value

Earnings grew by 87.3% over the past year

Pays a high and reliable dividend of 4.09%

Risk Analysis

Earnings are forecast to decline by an average of -11.5% per year for the next 3 years

Debt is not well covered by operating cash flow

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

6 star dividend payer with proven track record.


Similar Companies

Share Price & News

How has Southern's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.2%

SO

-0.3%

US Electric Utilities

0.8%

US Market


1 Year Return

29.1%

SO

12.3%

US Electric Utilities

17.8%

US Market

Return vs Industry: SO exceeded the US Electric Utilities industry which returned 12.3% over the past year.

Return vs Market: SO exceeded the US Market which returned 17.8% over the past year.


Shareholder returns

SOIndustryMarket
7 Day-3.2%-0.3%0.8%
30 Day0.4%3.5%1.8%
90 Day1.2%0.3%4.1%
1 Year35.0%29.1%16.1%12.3%20.4%17.8%
3 Year44.5%25.2%45.0%30.7%45.9%36.4%
5 Year59.0%25.7%61.7%34.3%68.1%49.6%

Price Volatility Vs. Market

How volatile is Southern's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Southern undervalued compared to its fair value and its price relative to the market?

17.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SO ($60.69) is trading below our estimate of fair value ($73.96)

Significantly Below Fair Value: SO is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: SO is good value based on its PE Ratio (13.8x) compared to the Electric Utilities industry average (24x).

PE vs Market: SO is good value based on its PE Ratio (13.8x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: SO's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: SO is overvalued based on its PB Ratio (2.3x) compared to the US Electric Utilities industry average (2.2x).


Next Steps

Future Growth

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

-11.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SO's earnings are forecast to decline over the next 3 years (-11.5% per year).

Earnings vs Market: SO's earnings are forecast to decline over the next 3 years (-11.5% per year).

High Growth Earnings: SO's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SO's revenue (2.3% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: SO's revenue (2.3% 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 (11.6%).


Next Steps

Past Performance

How has Southern performed over the past 5 years?

9.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SO has a large one-off gain of $2.3B impacting its September 30 2019 financial results.

Growing Profit Margin: SO's current net profit margins (21%) are higher than last year (10.3%).


Past Earnings Growth Analysis

Earnings Trend: SO's earnings have grown by 9.7% per year over the past 5 years.

Accelerating Growth: SO's earnings growth over the past year (87.3%) exceeds its 5-year average (9.7% per year).

Earnings vs Industry: SO earnings growth over the past year (87.3%) exceeded the Electric Utilities industry 2%.


Return on Equity

High ROE: SO's Return on Equity (14.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Southern's financial position?


Financial Position Analysis

Short Term Liabilities: SO's short term assets ($9.9B) do not cover its short term liabilities ($10.5B).

Long Term Liabilities: SO's short term assets ($9.9B) do not cover its long term liabilities ($75.0B).


Debt to Equity History and Analysis

Debt Level: SO's debt to equity ratio (143.2%) is considered high.

Reducing Debt: SO's debt to equity ratio has increased from 115.8% to 143.2% over the past 5 years.

Debt Coverage: SO's debt is not well covered by operating cash flow (13.6%).

Interest Coverage: SO's interest payments on its debt are well covered by EBIT (3x coverage).


Balance Sheet

Inventory Level: SO has a high level of physical assets or inventory.

Debt Coverage by Assets: SO's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

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

4.09%

Current Dividend Yield


Dividend Yield vs Market

company4.1%marketbottom25%1.4%markettop25%3.7%industryaverage3.2%forecastin3Years4.2%

Current dividend yield vs market & industry

Notable Dividend: SO's dividend (4.09%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: SO's dividend (4.09%) is in the top 25% of dividend payers in the US market (3.72%)


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.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (55.5%), SO's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SO's dividends in 3 years are forecast to be covered by earnings (77.9% payout ratio).


Next Steps

Management

What is the CEO of Southern's salary, the management and board of directors tenure and is there insider trading?

6.8yrs

Average management tenure


CEO

Tom Fanning (62yo)

9yrs

Tenure

US$13,097,691

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 ($USD13.10M) is about average for companies of similar size in the US market ($USD10.94M).

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


Management Age and Tenure

6.8yrs

Average Tenure

56yo

Average Age

Experienced Management: SO's management team is seasoned and experienced (6.8 years average tenure).


Board Age and Tenure

7.0yrs

Average Tenure

59.5yo

Average Age

Experienced Board: SO's board of directors are considered experienced (7 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyUS$63,34507 Jun 19
Anthony Earley
EntityIndividual
Shares1,261
Max PriceUS$51.83
SellUS$952,91208 Mar 19
Christopher Womack
EntityIndividual
Shares18,922
Max PriceUS$50.36
BuyUS$100,38006 Mar 19
Henry Clark
EntityIndividual
Shares2,000
Max PriceUS$50.19

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.6%.


Management Team

  • William Bowers (63yo)

    Chairman

    • Tenure: 5.6yrs
    • Compensation: US$5.38m
  • Drew Evans (52yo)

    Executive VP & CFO

    • Tenure: 1.5yrs
    • Compensation: US$4.39m
  • Tom Fanning (62yo)

    Chairman

    • Tenure: 9yrs
    • Compensation: US$13.10m
  • Martin Davis (55yo)

    Chief Information Officer & Executive VP

    • Tenure: 4.4yrs
  • Mark Crosswhite (57yo)

    Chairman

    • Tenure: 0yrs
    • Compensation: US$4.96m
  • Stephen Kuczynski (57yo)

    Chairman

    • Tenure: 8.4yrs
    • Compensation: US$6.46m
  • Ann Daiss (51yo)

    Chief Accounting Officer & Comptroller

    • Tenure: 6.8yrs
  • James Kerr (55yo)

    Executive VP

    • Tenure: 5.8yrs
  • Stacy Kilcoyne

    Vice President of Human Resources

    • Tenure: 9.2yrs
  • Scott Gammill

    Head of Investor Relations

    • Tenure: 0yrs

Board Members

  • Johnny Johns (67yo)

    Independent Director

    • Tenure: 4.8yrs
    • Compensation: US$270.00k
  • Jon Boscia (67yo)

    Independent Director

    • Tenure: 12yrs
    • Compensation: US$250.00k
  • Bill Smith (66yo)

    Independent Director

    • Tenure: 13.8yrs
    • Compensation: US$260.00k
  • William Bowers (63yo)

    Chairman

    • Tenure: 5.6yrs
    • Compensation: US$5.38m
  • David Grain (57yo)

    Independent Director

    • Tenure: 7yrs
    • Compensation: US$270.00k
  • Tom Fanning (62yo)

    Chairman

    • Tenure: 9yrs
    • Compensation: US$13.10m
  • Kim Greene (53yo)

    Chairman

    • Tenure: 1.5yrs
    • Compensation: US$3.47m
  • Mark Crosswhite (57yo)

    Chairman

    • Tenure: 0yrs
    • Compensation: US$4.96m
  • Stephen Kuczynski (57yo)

    Chairman

    • Tenure: 8.4yrs
    • Compensation: US$6.46m
  • Anthony Wilson (55yo)

    Chairman

    • Tenure: 3.3yrs

Company Information

The Southern Company's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: The Southern Company
  • Ticker: SO
  • Exchange: NYSE
  • Founded: 1945
  • Industry: Electric Utilities
  • Sector: Utilities
  • Market Cap: US$63.270b
  • Shares outstanding: 1.05b
  • Website: https://www.southerncompany.com

Number of Employees


Location

  • The Southern Company
  • 30 Ivan Allen Jr Boulevard NW
  • Atlanta
  • Georgia
  • 30308
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SONYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
SOTDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
0L8ALSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
SOTETLX (Eurotlx)YesCommon StockITEURJan 1968
SOUTWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968

Biography

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates in four segments: Gas Distribution Operations, Gas Pipeline Investments ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/11 23:41
End of Day Share Price2019/12/11 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.