SOUTHERN CO/THE (SO) Stock Fundamental Analysis
USA - NYSE:SO - US8425871071 - Common Stock
94.53 USD
+0.84 (+0.9%)
94.53 USD
0 (0%)
We assign a fundamental rating of 4 out of 10 to SO. SO was compared to 47 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 quite expensive at the moment. It does show a decent growth rate. SO also has an excellent dividend rating.
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.
In the past 5 years SO always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of SO (2.88%) is comparable to the rest of the industry.
Looking at the Return On Equity, with a value of 12.59%, SO is in the better half of the industry, outperforming 70.21% of the companies in the same industry.
With a decent Return On Invested Capital value of 4.53%, SO is doing good in the industry, outperforming 63.83% 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 in line with the industry average of 5.01%.
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 74.47% 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 has a Gross Margin of 89.14%. This is amongst the best in 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.
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
Based on the Altman-Z score of 1.00, we must say that SO is in the distress zone and has some risk of bankruptcy.
SO has a Altman-Z score (1.00) which is in line with its industry peers.
SO has a Debt/Equity ratio of 1.88. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 1.88, SO is not doing good in the industry: 89.36% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1 |
ROIC/WACC0.67
WACC6.78%
2.3 Liquidity
A Current Ratio of 0.74 indicates that SO may have some problems paying its short term obligations.
SO has a Current ratio of 0.74. This is in the lower half of the industry: SO underperforms 63.83% of its industry peers.
A Quick Ratio of 0.53 indicates that SO may have some problems paying its short term obligations.
With a Quick ratio value of 0.53, 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 | 0.74 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
The earnings per share for SO have decreased by -2.63% in the last year.
The Earnings Per Share has been growing slightly by 5.48% on average over the past years.
The Revenue has grown by 8.53% 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)-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
SO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.73% yearly.
The Revenue is expected to grow by 4.39% on average over the next years.
EPS Next Y8.23%
EPS Next 2Y7.69%
EPS Next 3Y7.47%
EPS Next 5Y6.73%
Revenue Next Year6.83%
Revenue Next 2Y5.74%
Revenue Next 3Y5.31%
Revenue Next 5Y4.39%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 23.17 indicates a rather expensive valuation of SO.
Based on the Price/Earnings ratio, SO is valued more expensive than 82.98% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.54. SO is around the same levels.
Based on the Price/Forward Earnings ratio of 20.07, the valuation of SO can be described as rather expensive.
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.
SO's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 23.05.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.17 | ||
| Fwd PE | 20.07 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, SO is valued a bit more expensive than 70.21% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 13.41 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
SO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.81
PEG (5Y)4.23
EPS Next 2Y7.69%
EPS Next 3Y7.47%
5. Dividend
5.1 Amount
SO has a Yearly Dividend Yield of 5.47%, which is a nice return.
Compared to an average industry Dividend Yield of 3.80, SO pays a better dividend. On top of this SO pays more dividend than 85.11% of the companies listed in the same industry.
SO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.47% |
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 69.13% 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.
DP69.13%
EPS Next 2Y7.69%
EPS Next 3Y7.47%
94.53
+0.84 (+0.9%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners71.62%
Inst Owner Change2.91%
Ins Owners0.09%
Ins Owner Change-1.29%
Market Cap103.99B
Analysts75.17
Price Target98.47 (4.17%)
Short Float %3.17%
Short Ratio7.5
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.47% |
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)0.39%
PT rev (3m)2.85%
EPS NQ rev (1m)-0.3%
EPS NQ rev (3m)0.5%
EPS NY rev (1m)0.05%
EPS NY rev (3m)-0.2%
Revenue NQ rev (1m)0.09%
Revenue NQ rev (3m)3.4%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)1.21%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.17 | ||
| Fwd PE | 20.07 | ||
| P/S | 3.67 | ||
| P/FCF | N/A | ||
| P/OCF | 11.28 | ||
| P/B | 3.06 | ||
| P/tB | 3.64 | ||
| EV/EBITDA | 13.41 |
EPS(TTM)4.08
EY4.32%
EPS(NY)4.71
Fwd EY4.98%
FCF(TTM)-0.98
FCFYN/A
OCF(TTM)8.38
OCFY8.87%
SpS25.78
BVpS30.92
TBVpS25.94
PEG (NY)2.81
PEG (5Y)4.23
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
WACC6.78%
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)-2.63%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%-16.36%
EPS Next Y8.23%
EPS Next 2Y7.69%
EPS Next 3Y7.47%
EPS Next 5Y6.73%
Revenue 1Y (TTM)8.53%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%7.89%
Revenue Next Year6.83%
Revenue Next 2Y5.74%
Revenue Next 3Y5.31%
Revenue Next 5Y4.39%
EBIT growth 1Y4.8%
EBIT growth 3Y10.62%
EBIT growth 5Y5.63%
EBIT Next Year84.89%
EBIT Next 3Y28.4%
EBIT Next 5Y16.78%
FCF growth 1Y63.92%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y63.97%
OCF growth 3Y16.63%
OCF growth 5Y11.11%