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. While SO is still in line with the averages on profitability rating, there are concerns on its financial health. SO is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year SO was profitable.
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
Looking at the Return On Assets, with a value of 3.11%, SO is in line with its industry, outperforming 51.06% of the companies in the same industry.
With a decent Return On Equity value of 13.61%, SO is doing good in the industry, outperforming 74.47% of the companies in the same industry.
SO has a Return On Invested Capital (4.64%) which is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for SO is significantly below the industry average of 38.54%.
The 3 year average ROIC (4.14%) for SO is below the current ROIC(4.64%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.11% | ||
| ROE | 13.61% | ||
| ROIC | 4.64% |
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 16.54%. This is in the better half of the industry: SO outperforms 70.21% of its industry peers.
SO's Profit Margin has declined in the last couple of years.
SO has a Operating Margin of 26.40%. This is in the better half of the industry: SO outperforms 74.47% of its industry peers.
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 89.46% is amongst the best of the industry. SO outperforms 82.98% of its industry peers.
SO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.4% | ||
| PM (TTM) | 16.54% | ||
| GM | 89.46% |
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.
The number of shares outstanding for SO remains at a similar level compared to 1 year ago.
SO has about the same amout of shares outstanding than it did 5 years ago.
Compared to 1 year ago, SO has a worse debt to assets ratio.
2.2 Solvency
SO has an Altman-Z score of 0.98. This is a bad value and indicates that SO is not financially healthy and even has some risk of bankruptcy.
SO has a Altman-Z score (0.98) which is in line with its industry peers.
SO has a debt to FCF ratio of 653.53. This is a negative value and a sign of low solvency as SO would need 653.53 years to pay back of all of its debts.
The Debt to FCF ratio of SO (653.53) is comparable to the rest of the industry.
A Debt/Equity ratio of 1.88 is on the high side and indicates that SO has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.88, SO is doing worse than 85.11% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | 653.53 | ||
| Altman-Z | 0.98 |
ROIC/WACC0.53
WACC8.77%
2.3 Liquidity
SO has a Current Ratio of 0.86. This is a bad value and indicates that SO is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.86, SO perfoms like the industry average, outperforming 42.55% of the companies in the same industry.
A Quick Ratio of 0.64 indicates that SO may have some problems paying its short term obligations.
With a Quick ratio value of 0.64, SO is not doing good in the industry: 63.83% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.64 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 9.79% over the past year.
SO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.48% yearly.
The Revenue has grown by 9.58% in the past year. This is quite good.
SO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.53% yearly.
EPS 1Y (TTM)9.79%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%19.42%
Revenue 1Y (TTM)9.58%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%16.99%
3.2 Future
Based on estimates for the next years, SO will show a small growth in Earnings Per Share. The EPS will grow by 7.22% on average per year.
SO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.67% yearly.
EPS Next Y8.47%
EPS Next 2Y7.57%
EPS Next 3Y7.44%
EPS Next 5Y7.22%
Revenue Next Year5.03%
Revenue Next 2Y4.56%
Revenue Next 3Y4.3%
Revenue Next 5Y4.67%
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
SO is valuated rather expensively with a Price/Earnings ratio of 20.81.
Compared to the rest of the industry, the Price/Earnings ratio of SO indicates a slightly more expensive valuation: SO is more expensive than 78.72% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 26.34. SO is valued slightly cheaper when compared to this.
With a Price/Forward Earnings ratio of 18.87, SO is valued on the expensive side.
78.72% of the companies in the same industry are cheaper than SO, based on the Price/Forward Earnings ratio.
SO's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.19.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.81 | ||
| Fwd PE | 18.87 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, SO is valued a bit more expensive than the industry average as 74.47% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, SO is valued a bit cheaper than the industry average as 61.70% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 927.71 | ||
| EV/EBITDA | 12.78 |
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)2.46
PEG (5Y)3.8
EPS Next 2Y7.57%
EPS Next 3Y7.44%
5. Dividend
5.1 Amount
SO has a Yearly Dividend Yield of 3.28%.
SO's Dividend Yield is comparable with the industry average which is at 3.56.
SO's Dividend Yield is a higher than the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.28% |
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 its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)1.87%
Div Incr Years23
Div Non Decr Years34
5.3 Sustainability
64.20% 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.
DP64.2%
EPS Next 2Y7.57%
EPS Next 3Y7.44%
88.63
+0.21 (+0.24%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners71.1%
Inst Owner Change1.44%
Ins Owners0.1%
Ins Owner Change5.36%
Market Cap97.41B
Analysts72.14
Price Target95.62 (7.89%)
Short Float %1.87%
Short Ratio4.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.28% |
Yearly Dividend2.69
Dividend Growth(5Y)1.87%
DP64.2%
Div Incr Years23
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2.2%
Min EPS beat(2)-4.33%
Max EPS beat(2)-0.07%
EPS beat(4)2
Avg EPS beat(4)3.82%
Min EPS beat(4)-4.33%
Max EPS beat(4)16.06%
EPS beat(8)6
Avg EPS beat(8)4.48%
EPS beat(12)9
Avg EPS beat(12)5.63%
EPS beat(16)11
Avg EPS beat(16)4.5%
Revenue beat(2)2
Avg Revenue beat(2)4.99%
Min Revenue beat(2)4.69%
Max Revenue beat(2)5.3%
Revenue beat(4)3
Avg Revenue beat(4)2.44%
Min Revenue beat(4)-3.09%
Max Revenue beat(4)5.3%
Revenue beat(8)3
Avg Revenue beat(8)-6.24%
Revenue beat(12)7
Avg Revenue beat(12)2.05%
Revenue beat(16)10
Avg Revenue beat(16)2.99%
PT rev (1m)-0.89%
PT rev (3m)1.81%
EPS NQ rev (1m)4.7%
EPS NQ rev (3m)-12.5%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.73%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.8%
Revenue NY rev (1m)0.74%
Revenue NY rev (3m)1.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.81 | ||
| Fwd PE | 18.87 | ||
| P/S | 3.5 | ||
| P/FCF | 927.71 | ||
| P/OCF | 10.01 | ||
| P/B | 2.88 | ||
| P/tB | 3.44 | ||
| EV/EBITDA | 12.78 |
EPS(TTM)4.26
EY4.81%
EPS(NY)4.7
Fwd EY5.3%
FCF(TTM)0.1
FCFY0.11%
OCF(TTM)8.85
OCFY9.99%
SpS25.34
BVpS30.79
TBVpS25.8
PEG (NY)2.46
PEG (5Y)3.8
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.11% | ||
| ROE | 13.61% | ||
| ROCE | 5.47% | ||
| ROIC | 4.64% | ||
| ROICexc | 4.72% | ||
| ROICexgc | 4.92% | ||
| OM | 26.4% | ||
| PM (TTM) | 16.54% | ||
| GM | 89.46% | ||
| FCFM | 0.38% |
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-Score6
Asset Turnover0.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | 653.53 | ||
| Debt/EBITDA | 4.97 | ||
| Cap/Depr | 177.66% | ||
| Cap/Sales | 34.55% | ||
| Interest Coverage | 2.85 | ||
| Cash Conversion | 76.17% | ||
| Profit Quality | 2.28% | ||
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.64 | ||
| Altman-Z | 0.98 |
F-Score6
WACC8.77%
ROIC/WACC0.53
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)9.79%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%19.42%
EPS Next Y8.47%
EPS Next 2Y7.57%
EPS Next 3Y7.44%
EPS Next 5Y7.22%
Revenue 1Y (TTM)9.58%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%16.99%
Revenue Next Year5.03%
Revenue Next 2Y4.56%
Revenue Next 3Y4.3%
Revenue Next 5Y4.67%
EBIT growth 1Y17.81%
EBIT growth 3Y10.62%
EBIT growth 5Y5.63%
EBIT Next Year83.12%
EBIT Next 3Y27.71%
EBIT Next 5Y18.82%
FCF growth 1Y103.75%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y75.14%
OCF growth 3Y16.63%
OCF growth 5Y11.11%