Southern Company logged a -0.4% change during today's afternoon session, and is now trading at a price of $69.12 per share.
Over the last year, Southern Company logged a -4.0% change, with its stock price reaching a high of $75.8 and a low of $60.71. Over the same period, the stock underperformed the S&P 500 index by -23.0%. As of April 2023, the company's 50-day average price was $69.45. 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 offered a 3.9% dividend yield over the last 12 months.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2018-02-21 | 2019-02-20 | 2020-02-20 | 2021-02-18 | 2022-02-17 | 2023-02-16 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $23,031 | $23,495 | $21,419 | $20,375 | $23,113 | $29,279 |
| Gross Margins | 68.0% | 66.0% | 71.0% | 75.0% | 70.0% | 60.0% |
| Operating Margins | 26% | 22% | 25% | 25% | 23% | 20% |
| Net Margins | 4.0% | 10.0% | 22.0% | 15.0% | 10.0% | 12.0% |
| Net Income (MM) | $880 | $2,242 | $4,754 | $3,134 | $2,408 | $3,535 |
| Net Interest Expense (MM) | -$1,694 | -$1,842 | -$1,736 | -$1,821 | -$1,837 | -$2,022 |
| Depreciation & Amort. (MM) | -$3,457 | -$3,549 | -$3,331 | -$3,905 | -$3,973 | -$4,064 |
| Earnings Per Share | $0.84 | $2.17 | $4.5 | $2.93 | $2.24 | $3.32 |
| EPS Growth | n/a | 158.33% | 107.37% | -34.89% | -23.55% | 48.21% |
| Diluted Shares (MM) | 1,008 | 1,025 | 1,054 | 1,065 | 1,068 | 1,062 |
| Free Cash Flow (MM) | $13,818 | $14,946 | $8,214 | $13,169 | $12,838 | $13,950 |
| Capital Expenditures (MM) | -$7,423 | -$8,001 | -$2,433 | -$6,473 | -$6,669 | -$7,648 |
| Net Current Assets (MM) | -$75,081 | -$78,748 | -$76,833 | -$81,793 | -$86,002 | -$89,943 |
| Long Term Debt (MM) | $44,462 | $40,736 | $41,798 | $45,073 | $50,120 | $50,656 |
| Net Debt / EBITDA | 5.19 | 5.21 | 5.18 | 5.32 | 5.66 | 5.67 |
Southern Company has strong margins with a stable trend, exceptional EPS growth, and wider gross margins than its peer group. However, the firm has a highly leveraged balance sheet. Finally, we note that Southern Company has weak revenue growth and a flat capital expenditure trend and irregular cash flows.
Southern Company's Valuation Is in Line With Its Sector Averages:
Southern Company has a trailing twelve month P/E ratio of 24.7, 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 17.2. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 22.3%. On this basis, Southern Company's PEG ratio is 1.11. Using instead the 10.4% weighted average of Southern Company's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 2.38, which suggests that its shares may be overpriced. Furthermore, Southern Company is likely overvalued compared to the book value of its equity, since its P/B ratio of 2.46 is higher than the sector average of 1.03. The company's shares are currently trading 40.3% above their Graham number.
Analysts Give Southern Company an Average Rating of Buy:
The 16 analysts following Southern Company have set target prices ranging from $65.0 to $81.0 per share, for an average of $73.31 with a buy rating. As of April 2023, the company is trading -5.3% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Southern Company has a very low short interest because 1.0% of the company's shares are sold short. Institutions own 65.7% of the company's shares, and the insider ownership rate stands at 0.16%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $6,858,617,037.
