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. While showing a medium growth rate, SO is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
SO had positive earnings in the past year.
SO had a positive operating cash flow in the past year.
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
The Return On Assets of SO (3.11%) is comparable to the rest of the industry.
The Return On Equity of SO (13.61%) is better than 74.47% of its industry peers.
Looking at the Return On Invested Capital, with a value of 4.64%, SO is in line with its industry, outperforming 59.57% of the companies in the same industry.
SO had an Average Return On Invested Capital over the past 3 years of 4.14%. This is significantly below the industry average of 38.54%.
The last Return On Invested Capital (4.64%) for SO is above the 3 year average (4.14%), which is a sign of increasing profitability.
| 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
Looking at the Profit Margin, with a value of 16.54%, 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 Profit Margin of SO has declined.
SO has a better Operating Margin (26.40%) than 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.
With an excellent Gross Margin value of 89.46%, SO belongs to the best of the industry, outperforming 82.98% of the companies in the same industry.
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 | 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
SO has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for SO remains at a similar level compared to 1 year ago.
Compared to 5 years ago, SO has about the same amount of shares outstanding.
The debt/assets ratio for SO is higher compared to a year ago.
2.2 Solvency
SO has an Altman-Z score of 1.02. 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 1.02, SO is in line with its industry, outperforming 57.45% of the companies in the same industry.
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.
SO's Debt to FCF ratio of 653.53 is in line compared to the rest of the industry. SO outperforms 59.57% of its industry peers.
SO has a Debt/Equity ratio of 1.88. This is a high value indicating a heavy dependency on external financing.
SO has a worse Debt to Equity ratio (1.88) than 85.11% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | 653.53 | ||
| Altman-Z | 1.02 |
ROIC/WACC0.67
WACC6.91%
2.3 Liquidity
A Current Ratio of 0.86 indicates that SO may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.86, SO is in line with its industry, 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.
Looking at the Quick ratio, with a value of 0.64, SO is doing worse than 63.83% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.64 |
3. Growth
3.1 Past
SO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.79%, which is quite good.
The Earnings Per Share has been growing slightly by 5.48% on average over the past years.
Looking at the last year, SO shows a quite strong growth in Revenue. The Revenue has grown by 9.58% in the last year.
The Revenue has been growing slightly by 4.53% on average over the past years.
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
The Earnings Per Share is expected to grow by 7.26% on average over the next years.
The Revenue is expected to grow by 4.87% on average over the next years.
EPS Next Y8.45%
EPS Next 2Y7.61%
EPS Next 3Y7.43%
EPS Next 5Y7.26%
Revenue Next Year5.55%
Revenue Next 2Y5.01%
Revenue Next 3Y4.73%
Revenue Next 5Y4.87%
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 stable.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 22.30, the valuation of SO can be described as rather expensive.
Based on the Price/Earnings ratio, SO is valued a bit more expensive than 76.60% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.35. SO is around the same levels.
The Price/Forward Earnings ratio is 20.21, which indicates a rather expensive current valuation of SO.
SO's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. SO is more expensive than 78.72% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of SO to the average of the S&P500 Index (37.54), we can say SO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.3 | ||
| Fwd PE | 20.21 |
4.2 Price Multiples
70.21% of the companies in the same industry are cheaper than SO, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of SO indicates a somewhat cheap valuation: SO is cheaper than 61.70% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 994.39 | ||
| EV/EBITDA | 13.33 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of SO may justify a higher PE ratio.
PEG (NY)2.64
PEG (5Y)4.07
EPS Next 2Y7.61%
EPS Next 3Y7.43%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.17%, SO has a reasonable but not impressive dividend return.
SO's Dividend Yield is comparable with the industry average which is at 3.54.
SO's Dividend Yield is a higher than the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.17% |
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
SO pays out 64.20% of its income as dividend. This is not a sustainable payout ratio.
The dividend of SO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP64.2%
EPS Next 2Y7.61%
EPS Next 3Y7.43%
95
-0.13 (-0.14%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners71.1%
Inst Owner Change-0.22%
Ins Owners0.1%
Ins Owner Change5.37%
Market Cap104.41B
Analysts74.48
Price Target96.18 (1.24%)
Short Float %2.75%
Short Ratio5.54
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.17% |
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)0.58%
PT rev (3m)1.24%
EPS NQ rev (1m)-2.63%
EPS NQ rev (3m)-13.68%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.26%
Revenue NQ rev (1m)-1.22%
Revenue NQ rev (3m)-1.17%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.48%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.3 | ||
| Fwd PE | 20.21 | ||
| P/S | 3.75 | ||
| P/FCF | 994.39 | ||
| P/OCF | 10.73 | ||
| P/B | 3.09 | ||
| P/tB | 3.68 | ||
| EV/EBITDA | 13.33 |
EPS(TTM)4.26
EY4.48%
EPS(NY)4.7
Fwd EY4.95%
FCF(TTM)0.1
FCFY0.1%
OCF(TTM)8.85
OCFY9.32%
SpS25.34
BVpS30.79
TBVpS25.8
PEG (NY)2.64
PEG (5Y)4.07
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 | 1.02 |
F-Score6
WACC6.91%
ROIC/WACC0.67
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 Y8.45%
EPS Next 2Y7.61%
EPS Next 3Y7.43%
EPS Next 5Y7.26%
Revenue 1Y (TTM)9.58%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%16.99%
Revenue Next Year5.55%
Revenue Next 2Y5.01%
Revenue Next 3Y4.73%
Revenue Next 5Y4.87%
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%