Now trading at a price of $74.55, Southern Company has moved -0.0% so far today.
Over the last year, Southern Company logged a 1.9% change, with its stock price reaching a high of $80.57 and a low of $60.71. Over the same period, the stock underperformed the S&P 500 index by -2.0%. As of April 2023, the company's 50-day average price was $69.54. The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. Based in Atlanta, GA, the large-cap Utilities company has 27,423 full time employees. Southern Company has returned a 3.6% dividend yield over the last 12 months, but this may not be sustainable seen that the company has a choppy cash flow record.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $21,419 | $20,375 | $23,113 | $29,279 |
| Gross Margins | 45.0% | 48.6% | 43.5% | 37.0% |
| Operating Margins | 24.9% | 23.7% | 15.2% | 19.0% |
| Net Margins | 22.2% | 15.38% | 10.42% | 12.07% |
| Net Income (MM) | $4,754 | $3,134 | $2,408 | $3,535 |
| Net Interest Income | -$1,736,000 | -$1,821,000 | -$1,837,000 | -$2,022,000 |
| Depreciation & Amort. | -$3,038,000 | -$3,518,000 | -$3,565,000 | -$3,663,000 |
| Earnings Per Share | $4.5 | $2.95 | $2.24 | $3.08 |
| EPS Growth | n/a | -34.44% | -24.07% | 37.5% |
| Diluted Shares (MM) | 1,053 | 1,058 | 1,068 | 1,090 |
| Free Cash Flow (MM) | -$1,774 | -$745 | -$1,071 | -$1,621 |
| Capital Expenditures (MM) | -$7,555 | -$7,441 | -$7,240 | -$7,923 |
| Net Current Assets (MM) | -$76,833 | -$81,793 | -$86,003 | -$89,943 |
| Current Ratio | 0.78 | 0.71 | 0.82 | 0.66 |
| Long Term Debt (MM) | $41,798 | $45,073 | $50,120 | $50,656 |
| Net Debt / EBITDA | 3.98 | 5.46 | 6.46 | 5.57 |
Southern Company has growing revenues and a flat capital expenditure trend, strong margins with a negative growth trend, and wider gross margins than its peer group. However, Southern Company has declining EPS growth, negative cash flows, and a highly leveraged balance sheet.
Southern Company's Valuation Is in Line With Its Sector Averages:
Southern Company has a trailing twelve month P/E ratio of 22.6, compared to an average of 22.89 for the Utilities sector. Based on its EPS guidance of $4.03, the company has a forward P/E ratio of 17.3. The -2.2% compound average growth rate of Southern Company's historical and projected earnings per share yields a PEG ratio of -10.35. This indicates that its shares are overvalued.Furthermore, Southern Company is likely overvalued compared to the book value of its equity, since its P/B ratio of 2.66 is higher than the sector average of 1.03. The company's shares are currently trading 66.3% above their Graham number.
Southern Company Has an Analyst Consensus of Little Upside Potential:
The 13 analysts following Southern Company have set target prices ranging from $63.0 to $82.0 per share, for an average of $73.38 with a hold rating. As of April 2023, the company is trading -5.2% away from its average target price, indicating that there is an analyst consensus of little upside potential.
Southern Company has a very low short interest because 1.4% of the company's shares are sold short. Institutions own 64.2% of the company's shares, and the insider ownership rate stands at 0.17%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 9% stake in the company is worth $7,299,505,772.
