SOUTHERN CO/THE (SO) Stock Fundamental Analysis
NYSE:SO - New York Stock Exchange, Inc. - US8425871071 - Common Stock - Currency: USD
Overall SO gets a fundamental rating of 4 out of 10. We evaluated SO against 47 industry peers in the Electric Utilities industry. SO scores excellent on profitability, but there are concerns on its financial health. SO is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
SO had positive earnings in the past year.
In the past year SO had a positive cash flow from operations.
SO had positive earnings in each of the past 5 years.
Each year in the past 5 years SO had a positive operating cash flow.
1.2 Ratios
With a Return On Assets value of 2.88%, SO perfoms like the industry average, outperforming 48.94% of the companies in the same industry.
With a decent Return On Equity value of 12.59%, SO is doing good in the industry, outperforming 76.60% of the companies in the same industry.
SO has a better Return On Invested Capital (4.53%) than 61.70% of its industry peers.
The Average Return On Invested Capital over the past 3 years for SO is in line with the industry average of 5.09%.
The 3 year average ROIC (4.14%) for SO is below the current ROIC(4.53%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.88% | ||
| ROE | 12.59% | ||
| ROIC | 4.53% |
ROA(3y)2.83%
ROA(5y)2.58%
ROE(3y)12.5%
ROE(5y)11.4%
ROIC(3y)4.14%
ROIC(5y)4.02%
1.3 Margins
SO has a Profit Margin of 15.10%. This is in the better half of the industry: SO outperforms 61.70% of its industry peers.
In the last couple of years the Profit Margin of SO has declined.
Looking at the Operating Margin, with a value of 25.39%, SO is in the better half of the industry, outperforming 70.21% of the companies in the same industry.
In the last couple of years the Operating Margin of SO has remained more or less at the same level.
SO's Gross Margin of 89.14% is amongst the best of the industry. SO outperforms 82.98% 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 Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.39% | ||
| PM (TTM) | 15.1% | ||
| GM | 89.14% |
OM growth 3Y5.39%
OM growth 5Y1.06%
PM growth 3Y16.73%
PM growth 5Y-5.73%
GM growth 3Y0.95%
GM growth 5Y0.39%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so SO is destroying value.
Compared to 1 year ago, SO has about the same amount of shares outstanding.
SO has about the same amout of shares outstanding than it did 5 years ago.
SO has a worse debt/assets ratio than last year.
2.2 Solvency
SO has an Altman-Z score of 1.00. This is a bad value and indicates that SO is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.00, SO is in line with its industry, outperforming 59.57% of the companies in the same industry.
SO has a Debt/Equity ratio of 1.88. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of SO (1.88) is worse than 89.36% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1 |
ROIC/WACC0.66
WACC6.85%
2.3 Liquidity
SO has a Current Ratio of 0.74. This is a bad value and indicates that SO is not financially healthy enough and could expect problems in meeting its short term obligations.
SO has a worse Current ratio (0.74) than 63.83% of its industry peers.
SO has a Quick Ratio of 0.74. This is a bad value and indicates that SO is not financially healthy enough and could expect problems in meeting its short term obligations.
SO has a worse Quick ratio (0.53) than 65.96% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
SO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.63%.
Measured over the past 5 years, SO shows a small growth in Earnings Per Share. The EPS has been growing by 5.48% on average per year.
SO shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.53%.
SO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.53% yearly.
EPS 1Y (TTM)-2.63%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%-16.36%
Revenue 1Y (TTM)8.53%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%7.89%
3.2 Future
The Earnings Per Share is expected to grow by 6.87% on average over the next years.
Based on estimates for the next years, SO will show a small growth in Revenue. The Revenue will grow by 4.31% on average per year.
EPS Next Y8.45%
EPS Next 2Y7.61%
EPS Next 3Y7.43%
EPS Next 5Y6.87%
Revenue Next Year5.23%
Revenue Next 2Y4.94%
Revenue Next 3Y4.67%
Revenue Next 5Y4.31%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 23.06, which indicates a rather expensive current valuation of SO.
80.85% of the companies in the same industry are cheaper than SO, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of SO to the average of the S&P500 Index (26.84), we can say SO is valued inline with the index average.
SO is valuated rather expensively with a Price/Forward Earnings ratio of 20.01.
Based on the Price/Forward Earnings ratio, SO is valued a bit more expensive than the industry average as 74.47% of the companies are valued more cheaply.
SO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 35.29, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.06 | ||
| Fwd PE | 20.01 |
4.2 Price Multiples
SO's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. SO is more expensive than 72.34% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 13.37 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates SO does not grow enough to justify the current Price/Earnings ratio.
SO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.73
PEG (5Y)4.21
EPS Next 2Y7.61%
EPS Next 3Y7.43%
5. Dividend
5.1 Amount
SO has a Yearly Dividend Yield of 3.14%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.46, SO has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.36, SO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.14% |
5.2 History
The dividend of SO has a limited annual growth rate of 1.87%.
SO has paid a dividend for at least 10 years, which is a reliable track record.
SO has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)1.87%
Div Incr Years23
Div Non Decr Years34
5.3 Sustainability
SO pays out 69.13% of its income as dividend. This is not a sustainable payout ratio.
SO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP69.13%
EPS Next 2Y7.61%
EPS Next 3Y7.43%
94.07
-0.12 (-0.13%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners71.53%
Inst Owner Change2.92%
Ins Owners0.09%
Ins Owner Change-3.42%
Market Cap103.48B
Analysts74.48
Price Target97.84 (4.01%)
Short Float %2.78%
Short Ratio5.72
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.14% |
Yearly Dividend2.69
Dividend Growth(5Y)1.87%
DP69.13%
Div Incr Years23
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.19%
Min EPS beat(2)-0.3%
Max EPS beat(2)-0.07%
EPS beat(4)1
Avg EPS beat(4)-0.26%
Min EPS beat(4)-4.33%
Max EPS beat(4)3.64%
EPS beat(8)5
Avg EPS beat(8)4.09%
EPS beat(12)8
Avg EPS beat(12)3.62%
EPS beat(16)10
Avg EPS beat(16)4.3%
Revenue beat(2)2
Avg Revenue beat(2)6.53%
Min Revenue beat(2)5.3%
Max Revenue beat(2)7.77%
Revenue beat(4)3
Avg Revenue beat(4)3.67%
Min Revenue beat(4)-3.09%
Max Revenue beat(4)7.77%
Revenue beat(8)4
Avg Revenue beat(8)-3.54%
Revenue beat(12)7
Avg Revenue beat(12)0.31%
Revenue beat(16)10
Avg Revenue beat(16)3.47%
PT rev (1m)2.19%
PT rev (3m)1.41%
EPS NQ rev (1m)-0.32%
EPS NQ rev (3m)-0.01%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.26%
Revenue NQ rev (1m)2.94%
Revenue NQ rev (3m)4.4%
Revenue NY rev (1m)-0.3%
Revenue NY rev (3m)0.64%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.06 | ||
| Fwd PE | 20.01 | ||
| P/S | 3.65 | ||
| P/FCF | N/A | ||
| P/OCF | 11.22 | ||
| P/B | 3.04 | ||
| P/tB | 3.63 | ||
| EV/EBITDA | 13.37 |
EPS(TTM)4.08
EY4.34%
EPS(NY)4.7
Fwd EY5%
FCF(TTM)-0.98
FCFYN/A
OCF(TTM)8.38
OCFY8.91%
SpS25.78
BVpS30.92
TBVpS25.94
PEG (NY)2.73
PEG (5Y)4.21
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.88% | ||
| ROE | 12.59% | ||
| ROCE | 5.36% | ||
| ROIC | 4.53% | ||
| ROICexc | 4.57% | ||
| ROICexgc | 4.76% | ||
| OM | 25.39% | ||
| PM (TTM) | 15.1% | ||
| GM | 89.14% | ||
| FCFM | N/A |
ROA(3y)2.83%
ROA(5y)2.58%
ROE(3y)12.5%
ROE(5y)11.4%
ROIC(3y)4.14%
ROIC(5y)4.02%
ROICexc(3y)4.18%
ROICexc(5y)4.06%
ROICexgc(3y)4.38%
ROICexgc(5y)4.26%
ROCE(3y)4.95%
ROCE(5y)4.79%
ROICexcg growth 3Y6.47%
ROICexcg growth 5Y1.27%
ROICexc growth 3Y6.72%
ROICexc growth 5Y1.53%
OM growth 3Y5.39%
OM growth 5Y1.06%
PM growth 3Y16.73%
PM growth 5Y-5.73%
GM growth 3Y0.95%
GM growth 5Y0.39%
F-Score4
Asset Turnover0.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.02 | ||
| Cap/Depr | 185.4% | ||
| Cap/Sales | 36.3% | ||
| Interest Coverage | 2.78 | ||
| Cash Conversion | 72.29% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.53 | ||
| Altman-Z | 1 |
F-Score4
WACC6.85%
ROIC/WACC0.66
Cap/Depr(3y)182.47%
Cap/Depr(5y)184.04%
Cap/Sales(3y)32.2%
Cap/Sales(5y)32.89%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-2.63%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%-16.36%
EPS Next Y8.45%
EPS Next 2Y7.61%
EPS Next 3Y7.43%
EPS Next 5Y6.87%
Revenue 1Y (TTM)8.53%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%7.89%
Revenue Next Year5.23%
Revenue Next 2Y4.94%
Revenue Next 3Y4.67%
Revenue Next 5Y4.31%
EBIT growth 1Y4.8%
EBIT growth 3Y10.62%
EBIT growth 5Y5.63%
EBIT Next Year84.71%
EBIT Next 3Y28.42%
EBIT Next 5Y15.94%
FCF growth 1Y63.92%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y63.97%
OCF growth 3Y16.63%
OCF growth 5Y11.11%