The Southern Company (SO) is a utility company valued at a market cap of $98.3 billion, based in Atlanta, Georgia. The company is primarily involved in generating, transmitting, and distributing electricity, as well as developing, constructing, acquiring, owning, and managing power generation assets, including renewable energy projects.
Despite its strong presence in the energy sector, SO has underperformed the broader market over the past 52 weeks. During this period, SO’s shares have only gained 5.1%, compared to the 15.5% surge in the S&P 500 Index ($SPX). On a year-to-date basis, the stock is up by 1.1%, slightly lower than the SPX’s 1.9% return. Additionally, SO has also lagged behind the State Street Utilities Select Sector SPDR ETF (XLU), which saw a 9.5% increase over the past 52 weeks.
On October 30, SO’s shares climbed by 1.7% following the release of better-than-expected Q3 results. The company reported a robust rise in its retail and wholesale electric revenues and natural gas revenues, leading to a total operating revenue of $7.8 billion, up 7.5% year-over-year and 3.7% ahead of consensus estimates. Furthermore, its adjusted EPS increased by 11.9% from the same period last year to $1.60, surpassing analyst estimates by 6.7%.
Analysts expect SO’s EPS to grow by 5.9% year over year to $4.29 for the current fiscal year ending in December. The company’s earnings surprise history has been mixed, exceeding consensus estimates in three of the last four quarters.
Of the 24 analysts covering the stock, the consensus rating is a “Hold,” with five “Strong Buy,” one “Moderate Buy,” 15 “Hold,” and three “Strong Sell” ratings. The configuration has become more bearish than a month ago, with two analysts suggesting a “Strong Sell” rating.
RBC Capital analyst Stephen D’Ambrisi recently maintained a “Sector Perform” rating on SO and raised its price target to $105, indicating a potential upside of 19.1% from the current levels. The mean price target of $96.78 represents a 9.7% premium from SO’s current price levels, while the Street-high price target of $108 suggests a potential upside of 22.5% from the current levels.
In conclusion, while The Southern Company has faced challenges in the market, its recent performance and analyst ratings indicate potential for growth and improvement in the future. Investors should keep a close eye on the company’s developments to make informed decisions about their investments.
