What Southern Company (SO) Investors Need to Know Today

Southern Company logged a 2.3% change during today's morning session, and is now trading at a price of $71.22 per share. The S&P 500 index moved -0.0% and the Nasdaq posted a -1.0% change.

Southern Company shares moved -9.0% over the last 52 weeks, with a high of $80.57 and a low of $60.71. During this time, the stock basically tracked the performance of the S&P 500. As of January 2022, the company's 50-day average price is $67.0.

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The large-cap Utilities company has 27,423 full time employees and is based in Atlanta, GA. Southern Company has returned a 3.9% dividend yield over the last 12 months.

Snapshot of the Company's Decent Operating Margins:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $21,419 $20,375 $23,113 $29,279
Revenue Growth n/a -4.87% 13.44% 26.68%
Gross Margins 45.0% 48.6% 43.5% 37.0%
Gross Margins Growth n/a 8.0% -10.49% -14.94%
Operating Margins 24.9% 23.7% 15.2% 19.0%
Operating Margins Growth n/a -4.82% -35.86% 25.0%
Net Margins 22.2% 15.38% 10.42% 12.07%
Net Margins Growth n/a -30.72% -32.25% 15.83%
Earnings Per Share $4.5 $2.95 $2.26 $3.26
EPS Growth n/a -34.44% -23.39% 44.25%
Diluted Shares (MM) 1,053 1,058 1,061 1,089
Free Cash Flow (MM) -$1,774 -$745 -$1,071 -$1,621
FCF Growth n/a 58.0% -43.76% -51.35%
Capital Expenditures (MM) -$7,555 -$7,441 -$7,240 -$7,923
Net Debt / EBITDA 4.94 5.22 6.47 5.41

Southern Company Is Too Expensive at Current Levels:

Compared to the Utilities sector's average of 22.89, Southern Company has a trailing twelve month P/E ratio of 21.8 and, according to its EPS guidance of 4.03, an expected P/E ratio of 17.7. Southern Company's PEG ratio is 7.94 based on its -2.2% compound average growth rate of historical and projected earnings per share. This suggests that the company's shares are overvalued.

Southern Company's P/B ratio is 2.5 compared to its sector average of 1.03. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 57.8% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 3.24 * 27.928) = $45.12

Southern Company Is the Subject of Mixed Market Indicators:

13 analysts are following Southern Company and have set target prices ranging from $57.0 to $79.0 per share. On average, they have given the company a rating of hold. At the current price of $71.22, SO is trading 0.52% away from its average analyst target price of $70.85 per share, implying an analyst consensus of little upside potential for the stock.

The company has a very low short interest since 1.1% of the company's shares are tied to short positions. Institutions own 64.2% of Southern Company's shares, while the insider ownership rate stands at 0.2%. The biggest shareholder is the Vanguard Group, Inc. with a 9% stake in the company worth approximately $6,972,961,174.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.