The Bull Case For Southern (SO) Could Change Following $1.75 Billion Composite Units Offering Completion

• In early November 2025, The Southern Company completed a US$1.75 billion Composite Units Offering, with eleven major financial institutions including Goldman Sachs, Morgan Stanley, and Citi joining as co-lead underwriters for the 35 million equity/derivative units priced at US$50 each.
• This substantial capital raise closely followed the release of quarterly earnings that outperformed both prior-year figures and consensus expectations, indicating sustained market interest and corporate momentum.
• We'll now explore how this successful equity offering may influence Southern’s future growth outlook and capital allocation priorities.

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Southern Investment Narrative Recap

Investors in The Southern Company are essentially betting on the continued strength of regulated utilities in the Southeast, underpinned by robust customer growth, constructive rate environments, and the ability to recover capital spending through regulated returns. The recent US$1.75 billion composite units offering provides flexibility for future capital projects but does not materially change the current short-term catalyst, which remains regulatory approval and timely execution for new generation investments. The principal near-term risk, potential shareholder dilution and its effect on EPS, remains ever-present as equity issuances fund a larger multi-year capital plan.

Among the latest announcements, the third-quarter 2025 earnings results stand out, with solid year-over-year growth in both net income and EPS. This financial momentum coincided with the composite units offering, reinforcing the company’s pursuit of disciplined growth while balancing the need for new capital to support expansion. However, this funding approach also intensifies concerns about margin pressure and dilution.

In contrast, with the share count set to grow and new projects pending regulatory approval, investors should be mindful of the potential for...

Read the full narrative on Southern (it's free!)

Southern's outlook anticipates $31.7 billion in revenue and $5.8 billion in earnings by 2028. This scenario is based on an annual revenue growth rate of 3.8% and an increase in earnings of $1.5 billion from the current $4.3 billion.

Uncover how Southern's forecasts yield a $100.45 fair value, a 10% upside to its current price.

Exploring Other Perspectives

Three members of the Simply Wall St Community estimate Southern’s fair value between US$92.53 and US$293.01 per share. With fresh capital raising sharpening the focus on future shareholder returns, participants may want to question how dilution could impact long-term value.

Explore 3 other fair value estimates on Southern - why the stock might be worth over 3x more than the current price!

Build Your Own Southern Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Southern research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Southern research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Southern's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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