Southern Co (SO) AI Stock Analysis

• Market Cap: $100.26B
• Dividend Yield: 3.19%
• Average Volume (3M): 4.59M
• Price to Earnings (P/E): 21.8
• Beta (1Y): 0.12
• Revenue Growth: 9.58%
• EPS Growth: 8.02%
• Country: US
• Employees: 28,314
• Sector: Utilities
• Sector Strength: 92
• Industry: Regulated Electric
• EPS (TTM): 1.23
• Shares Outstanding: 1,099,055,000
• 10 Day Avg. Volume: 3,998,123
• 30 Day Avg. Volume: 4,592,389
• PEG Ratio: 4.82
• Price to Book (P/B): 2.94
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -2.55K
• Enterprise Value/Market Cap: 1.69
• Enterprise Value/Revenue: 1.58
• Enterprise Value/Gross Profit: 13.39
• Enterprise Value/Ebitda: 3.22
• 1Y Price Target: $95.18
• Price Target Upside: 5.35% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12

Southern Co's overall stock score is bolstered by strong financial performance, particularly in revenue growth and operational efficiency. The positive earnings call further supports optimism for future growth, despite challenges in cash flow management and potential cost increases due to tariffs. The stock's technical indicators and fair valuation provide a stable outlook, making it an attractive option for investors seeking steady returns in the regulated electric industry.

Positive Factors

Load Growth

Strong load growth remains, with data centers load increasing 11% YoY in Q1, indicating continued demand.

Regulatory Certainty

Georgia PSC finalized the 100+MW customer tariff framework, which is encouraging more regulatory certainty and pipeline growth.

Negative Factors

Expenses

Earnings performance was offset by higher operating and maintenance expense, higher depreciation and amortization expense, and higher interest expense.

Valuation

Shares currently trade at a ~15% P/E premium to the group, which reflects fair value and justifies a Neutral-rating.

Southern Co Business Overview & Revenue Model

Company Description

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. In addition, it owns and/or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, three nuclear generating stations, 13 combined cycle/cogeneration stations, 45 solar facilities, 15 wind facilities, one fuel cell facility, and four battery storage facility; and constructs, operates, and maintains 76,289 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 8.7 million electric and gas utility customers. Further, the company offers digital wireless communications and fiber optics services. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.

How the Company Makes Money

Southern Company generates revenue primarily through the regulated sale of electricity and natural gas to residential, commercial, and industrial customers. The company's key revenue streams include electricity sales, which are driven by customer demand and regulated rates, and natural gas sales, which are influenced by market prices and consumption patterns. Southern Co. also earns income from its unregulated businesses, such as wholesale electricity sales and energy-related services. Significant partnerships, investments in renewable energy, and strategic acquisitions further contribute to the company's earnings by enhancing its capacity and market reach.

Southern Co Financial Statement Overview

Summary

Southern Co demonstrates solid revenue growth and profitability. High leverage is typical for the industry and is managed effectively with good equity utilization. However, negative free cash flow due to high capital expenditures necessitates better cash management strategies.

Income Statement

Southern Co exhibits solid revenue growth with a 4.2% increase in TTM compared to the previous annual figure. The gross profit margin stands at 45.4% TTM, indicating strong profitability. The net profit margin of 16.5% TTM is robust, and both EBIT and EBITDA margins reflect operational efficiency at 26.4% and 48.7% respectively. Overall, the company demonstrates stable profitability and efficient operations, although gross profit has slightly decreased compared to the previous year.

Balance Sheet

The balance sheet shows a debt-to-equity ratio of 2.07, indicating a high leverage level typical in the regulated electric industry. The return on equity is healthy at 13.6% TTM, reflecting effective use of shareholders' capital. The equity ratio of 22.8% suggests a moderate reliance on equity financing. While leverage is high, the company maintains a stable equity base and good returns for shareholders.

Cash Flow

Operating cash flow remains strong at $9.73 billion TTM, although free cash flow is negative at -$39 million, mainly due to high capital expenditures. The operating cash flow to net income ratio is solid at 2.11, indicating good cash conversion from earnings. However, the decline in free cash flow growth is a concern, necessitating careful management of capital expenditures to improve cash generation.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
27.85B	26.72B	25.25B	29.28B	23.11B	20.38B
	Gross Profit
12.65B	13.34B	11.71B	10.82B	10.06B	9.90B
	EBIT
7.35B	7.07B	5.83B	5.37B	3.70B	4.88B
	EBITDA
13.58B	13.20B	11.74B	9.97B	8.31B	9.20B
	Net Income Common Stockholders
4.61B	4.40B	3.98B	3.54B	2.41B	3.13B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.33B	1.07B	748.00M	1.92B	1.80B	1.06B
	Total Assets
148.11B	145.18B	139.33B	134.89B	127.53B	122.94B
	Total Debt
70.12B	66.28B	63.49B	59.13B	55.47B	51.04B
	Net Debt
67.79B	65.21B	62.74B	57.22B	53.67B	49.98B
	Total Liabilities
110.89B	108.51B	104.11B	100.36B	94.97B	90.41B
	Stockholders Equity
33.84B	33.21B	31.44B	30.41B	28.16B	28.26B
Cash Flow		Free Cash Flow
-39.00M	833.00M	-1.54B	-1.62B	-1.07B	-745.00M
	Operating Cash Flow
9.73B	9.79B	7.55B	6.30B	6.17B	6.70B
	Investing Cash Flow
-9.86B	-9.40B	-9.67B	-8.43B	-7.35B	-7.03B
	Financing Cash Flow
1.63B	-208.00M	999.00M	2.34B	1.95B	-576.00M

Southern Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 90.35
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SO, the sentiment is Positive. The current price of 90.35 is below the 20-day moving average (MA) of 91.03, above the 50-day MA of 90.31, and above the 200-day MA of 86.82, indicating a neutral trend. The MACD of 0.31 indicates Positive momentum. The RSI at 48.58 is Neutral, neither overbought nor oversold. The STOCH value of 37.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SO.

Southern Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DUK	80 Outperform	$95.53B	20.12	9.48%	3.46%	5.02%	45.08%
NEE	77 Outperform	$136.98B	24.72	11.19%	3.00%	20.35%	-27.07%
EXC	76 Outperform	$45.64B	16.77	10.10%	3.41%	6.71%	16.09%
SO	74 Outperform	$100.26B	21.83	14.01%	3.19%	9.58%	8.02%
D	70 Outperform	$46.63B	20.42	8.22%	4.85%	3.62%	40.33%
AEP	67 Neutral	$59.79B	20.71	10.41%	3.46%	4.20%	-3.64%
Sector *	63 Neutral	$8.50B	10.80	5.35%	4.36%	3.58%	-11.46%

Southern Co Corporate Events

Southern Co Elects James Etheredge as New Director

On February 11, 2025, Southern Company announced the election of Mr. James O. Etheredge as a new director, effective April 1, 2025. Mr. Etheredge, who retired in August 2023 as the CEO of Accenture North America, will join Southern Company without any existing arrangements influencing his selection and will participate in their standard non-employee director compensation program.