NYSE:SO

Stock Analysis Report

Executive Summary

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

Rewards

PE ratio (12.8x) is below the US market (13.3x)

Earnings grew by 112.9% over the past year

Pays a high and reliable dividend of 4.26%

Risk Analysis

Earnings are forecast to decline by an average of -1.7% per year for the next 3 years

Debt is not well covered by operating cash flow

Highly volatile share price over past 3 months

Large one-off items impacting financial results

+ 1 more risk


Snowflake Analysis

Established 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's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

11.0%

SO

8.3%

US Electric Utilities

9.4%

US Market


1 Year Return

11.6%

SO

1.1%

US Electric Utilities

-6.8%

US Market

Return vs Industry: SO exceeded the US Electric Utilities industry which returned 0% over the past year.

Return vs Market: SO exceeded the US Market which returned -8.1% over the past year.


Shareholder returns

SOIndustryMarket
7 Day11.0%8.3%9.4%
30 Day-6.2%-8.8%-3.9%
90 Day-8.6%-9.4%-16.5%
1 Year16.3%11.6%4.3%1.1%-4.8%-6.8%
3 Year35.5%17.7%25.0%13.1%23.4%15.2%
5 Year66.6%31.9%58.3%32.1%41.3%25.7%

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?

12.84x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SO ($58.18) is trading above our estimate of fair value ($44.72)

Significantly Below Fair Value: SO is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: SO is good value based on its PE Ratio (12.8x) compared to the Electric Utilities industry average (20.6x).

PE vs Market: SO is good value based on its PE Ratio (12.8x) compared to the US market (13.3x).


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 (2.2x) compared to the US Electric Utilities industry average (2x).


Next Steps

Future Growth

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

-1.7%

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 (-1.7% per year).

Earnings vs Market: SO's earnings are forecast to decline over the next 3 years (-1.7% per year).

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

Revenue vs Market: SO's revenue (2.8% per year) is forecast to grow slower than the US market (6.9% per year).

High Growth Revenue: SO's revenue (2.8% 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 (11.8%).


Next Steps

Past Performance

How has Southern performed over the past 5 years?

14.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SO has a large one-off gain of $2.4B impacting its December 31 2019 financial results.

Growing Profit Margin: SO's current net profit margins (22.1%) are higher than last year (9.5%).


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 earnings growth over the past year (112.9%) exceeds its 5-year average (14.1% per year).

Earnings vs Industry: SO earnings growth over the past year (112.9%) exceeded the Electric Utilities industry 6%.


Return on Equity

High ROE: SO's Return on Equity (14.8%) is considered low.


Next Steps

Financial Health

How is Southern's financial position?


Financial Position Analysis

Short Term Liabilities: SO's short term assets ($9.8B) do not cover its short term liabilities ($12.5B).

Long Term Liabilities: SO's short term assets ($9.8B) do not cover its long term liabilities ($74.1B).


Debt to Equity History and Analysis

Debt Level: SO's debt to equity ratio (145.4%) is considered high.

Reducing Debt: SO's debt to equity ratio has increased from 115.5% to 145.4% 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 well covered by EBIT (3.2x coverage).


Balance Sheet


Next Steps

Dividend

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

4.26%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: SO's dividend (4.26%) is higher than the bottom 25% of dividend payers in the US market (1.89%).

High Dividend: SO's dividend (4.26%) is low compared to the top 25% of dividend payers in the US market (5.26%).


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 (54.3%), 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 (76.5% payout ratio).


Next Steps

Management

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

7.1yrs

Average management tenure


CEO

Tom Fanning (62yo)

9.33s

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 ($USD13.10M) is about average for companies of similar size in the US market ($USD11.77M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Thomas Fanning
Chairman9.33yrsUS$13.10m0.060% $36.7m
Andrew Evans
Executive VP & CFO1.83yrsUS$4.39m0.014% $8.4m
William Bowers
Chairman5.92yrsUS$5.38m0.016% $9.9m
Mark Crosswhite
Chairmanno dataUS$4.96m0.011% $6.5m
Stephen Kuczynski
Chairman8.75yrsUS$6.46m0.0080% $4.9m
Ann Daiss
Chief Accounting Officer & Comptroller7.08yrsno data0.0019% $1.1m
Martin Davis
Chief Information Officer & Executive VP4.75yrsno datano data
Scott Gammill
Director of Investor Relationsno datano datano data
James Kerr
Executive VP6.08yrsno data0.0086% $5.3m
Stacy Kilcoyne
Vice President of Human Resources9.5yrsno datano data

7.1yrs

Average Tenure

56yo

Average Age

Experienced Management: SO's management team is seasoned and experienced (7.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Thomas Fanning
Chairman9.33yrsUS$13.10m0.060% $36.7m
William Bowers
Chairman5.92yrsUS$5.38m0.016% $9.9m
Mark Crosswhite
Chairmanno dataUS$4.96m0.011% $6.5m
Stephen Kuczynski
Chairman8.75yrsUS$6.46m0.0080% $4.9m
Kimberly Greene
Chairman1.83yrsUS$3.47m0.0076% $4.7m
Anthony Wilson
Chairman3.67yrsno data0.0048% $2.9m
John Johns
Independent Director5.17yrsUS$270.00k0.000050% $30.6k
Jon Boscia
Independent Director12.33yrsUS$250.00k0.015% $9.2m
William Smith
Independent Director14.17yrsUS$260.00k0.00084% $514.7k
David Grain
Independent Director7.33yrsUS$270.00k0.0010% $625.0k

7.3yrs

Average Tenure

59.5yo

Average Age

Experienced Board: SO's board of directors are considered experienced (7.3 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: SO insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.5%.


Top Shareholders

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$61.277b
  • Shares outstanding: 1.05b
  • Website: https://www.southerncompany.com

Number of Employees


Location

  • The Southern Company
  • 30 Ivan Allen Jr. Boulevard, N.W.
  • 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
T1SO34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COMBRBRLDec 2019

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, Wholesale Gas Services, and Gas Marketing Services. The company also constructs, acquires, owns, and manages power generation assets, including renewable energy facilities 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. It owns and/or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, 3 nuclear generating stations, 13 combined cycle/cogeneration stations, 42 solar facilities, 10 wind facilities, and 1 biomass facility; and constructs, operates, and maintains 75,585 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 8 million electric and gas utility customers. It also provides products and services in the areas of energy efficiency, and utility infrastructure. In addition, the company offers digital wireless communications services with various communication options, including push to talk, cellular service, text messaging, wireless Internet access, and wireless data. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/09 00:49
End of Day Share Price2020/04/08 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.