SOUTHERN CO/THE (SO)

US8425871071 - Common Stock

80.14  +2.06 (+2.64%)

After market: 80.45 +0.31 (+0.39%)

Fundamental Rating

4

SO gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 45 industry peers in the Electric Utilities industry. While SO has a great profitability rating, there are quite some concerns on its financial health. SO is valied quite expensively at the moment, while it does show a decent growth rate.



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7

1. Profitability

1.1 Basic Checks

In the past year SO was profitable.
SO had a positive operating cash flow in the past year.
SO had positive earnings in each of the past 5 years.
SO had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

With a Return On Assets value of 3.03%, SO perfoms like the industry average, outperforming 51.11% of the companies in the same industry.
SO has a Return On Equity of 13.30%. This is in the better half of the industry: SO outperforms 71.11% of its industry peers.
With a Return On Invested Capital value of 4.04%, SO perfoms like the industry average, outperforming 60.00% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for SO is in line with the industry average of 4.95%.
The 3 year average ROIC (3.85%) for SO is below the current ROIC(4.04%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 3.03%
ROE 13.3%
ROIC 4.04%
ROA(3y)2.45%
ROA(5y)2.77%
ROE(3y)10.91%
ROE(5y)12.16%
ROIC(3y)3.85%
ROIC(5y)3.94%

1.3 Margins

SO's Profit Margin of 16.70% is fine compared to the rest of the industry. SO outperforms 77.78% of its industry peers.
In the last couple of years the Profit Margin of SO has grown nicely.
SO has a better Operating Margin (24.56%) than 80.00% of its industry peers.
SO's Operating Margin has been stable in the last couple of years.
SO has a Gross Margin of 89.17%. This is amongst the best in the industry. SO outperforms 86.67% of its industry peers.
In the last couple of years the Gross Margin of SO has remained more or less at the same level.
Industry RankSector Rank
OM 24.56%
PM (TTM) 16.7%
GM 89.17%
OM growth 3Y-3.35%
OM growth 5Y0.57%
PM growth 3Y0.94%
PM growth 5Y10.69%
GM growth 3Y-0.72%
GM growth 5Y0.44%

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1

2. Health

2.1 Basic Checks

SO has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, SO has about the same amount of shares outstanding.
The number of shares outstanding for SO has been increased compared to 5 years ago.
SO has a worse debt/assets ratio than last year.

2.2 Solvency

Based on the Altman-Z score of 0.92, we must say that SO is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.92, SO is in line with its industry, outperforming 55.56% of the companies in the same industry.
SO has a Debt/Equity ratio of 1.94. This is a high value indicating a heavy dependency on external financing.
SO's Debt to Equity ratio of 1.94 is on the low side compared to the rest of the industry. SO is outperformed by 86.67% of its industry peers.
Industry RankSector Rank
Debt/Equity 1.94
Debt/FCF N/A
Altman-Z 0.92
ROIC/WACC0.6
WACC6.72%

2.3 Liquidity

SO has a Current Ratio of 0.92. This is a bad value and indicates that SO is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.92, SO is in line with its industry, outperforming 42.22% of the companies in the same industry.
A Quick Ratio of 0.63 indicates that SO may have some problems paying its short term obligations.
SO has a Quick ratio of 0.63. This is in the lower half of the industry: SO underperforms 66.67% of its industry peers.
Industry RankSector Rank
Current Ratio 0.92
Quick Ratio 0.63

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4

3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 13.12% over the past year.
The Earnings Per Share has been growing slightly by 3.46% on average over the past years.
Looking at the last year, SO shows a very negative growth in Revenue. The Revenue has decreased by -12.68% in the last year.
SO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.45% yearly.
EPS 1Y (TTM)13.12%
EPS 3Y3.85%
EPS 5Y3.46%
EPS Q2Q%30.38%
Revenue 1Y (TTM)-12.68%
Revenue growth 3Y7.42%
Revenue growth 5Y1.45%
Sales Q2Q%2.56%

3.2 Future

SO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.65% yearly.
Based on estimates for the next years, SO will show a small growth in Revenue. The Revenue will grow by 3.61% on average per year.
EPS Next Y13.59%
EPS Next 2Y10.57%
EPS Next 3Y9.03%
EPS Next 5Y7.65%
Revenue Next Year0.45%
Revenue Next 2Y2.35%
Revenue Next 3Y2.45%
Revenue Next 5Y3.61%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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2

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 20.65, which indicates a rather expensive current valuation of SO.
77.78% of the companies in the same industry are cheaper than SO, based on the Price/Earnings ratio.
SO is valuated rather cheaply when we compare the Price/Earnings ratio to 28.05, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 18.01, SO is valued on the expensive side.
Based on the Price/Forward Earnings ratio, SO is valued a bit more expensive than the industry average as 73.33% of the companies are valued more cheaply.
The average S&P500 Price/Forward Earnings ratio is at 20.07. SO is around the same levels.
Industry RankSector Rank
PE 20.65
Fwd PE 18.01

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SO indicates a slightly more expensive valuation: SO is more expensive than 77.78% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 12.97

4.3 Compensation for Growth

SO's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
SO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.52
PEG (5Y)5.96
EPS Next 2Y10.57%
EPS Next 3Y9.03%

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6

5. Dividend

5.1 Amount

SO has a Yearly Dividend Yield of 3.73%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.01, SO has a dividend in line with its industry peers.
SO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.38.
Industry RankSector Rank
Dividend Yield 3.73%

5.2 History

The dividend of SO has a limited annual growth rate of 2.61%.
SO has been paying a dividend for at least 10 years, so it has a reliable track record.
SO has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)2.61%
Div Incr Years19
Div Non Decr Years19

5.3 Sustainability

71.30% of the earnings are spent on dividend by SO. This is not a sustainable payout ratio.
SO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP71.3%
EPS Next 2Y10.57%
EPS Next 3Y9.03%

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SOUTHERN CO/THE

NYSE:SO (5/31/2024, 7:06:37 PM)

After market: 80.45 +0.31 (+0.39%)

80.14

+2.06 (+2.64%)

Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap87.63B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 3.73%
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
Industry RankSector Rank
PE 20.65
Fwd PE 18.01
P/S
P/FCF
P/OCF
P/B
P/tB
EV/EBITDA
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.52
PEG (5Y)5.96
Profitability
Industry RankSector Rank
ROA 3.03%
ROE 13.3%
ROCE
ROIC
ROICexc
ROICexgc
OM 24.56%
PM (TTM) 16.7%
GM 89.17%
FCFM
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.18
Health
Industry RankSector Rank
Debt/Equity 1.94
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 0.92
Quick Ratio 0.63
Altman-Z
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)13.12%
EPS 3Y3.85%
EPS 5Y
EPS Q2Q%
EPS Next Y13.59%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-12.68%
Revenue growth 3Y7.42%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y