SOUTHERN CO/THE (SO) Stock Fundamental Analysis
NYSE:SO - New York Stock Exchange, Inc. - US8425871071 - Common Stock - Currency: USD
SO gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals 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.
In the past year SO had a positive cash flow from operations.
Each year in the past 5 years SO has been profitable.
In the past 5 years SO always reported a positive cash flow from operatings.
1.2 Ratios
SO has a Return On Assets (3.03%) which is in line with its industry peers.
With a decent Return On Equity value of 13.25%, SO is doing good in the industry, outperforming 73.68% of the companies in the same industry.
With a decent Return On Invested Capital value of 4.59%, SO is doing good in the industry, outperforming 68.42% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for SO is in line with the industry average of 4.94%.
The last Return On Invested Capital (4.59%) for SO is above the 3 year average (4.14%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.03% | ||
| ROE | 13.25% | ||
| ROIC | 4.59% |
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's Profit Margin of 16.47% is fine compared to the rest of the industry. SO outperforms 76.32% of its industry peers.
In the last couple of years the Profit Margin of SO has declined.
SO has a better Operating Margin (26.37%) than 78.95% of its industry peers.
SO's Operating Margin has been stable in the last couple of years.
SO has a better Gross Margin (89.72%) than 78.95% of its industry peers.
SO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.37% | ||
| PM (TTM) | 16.47% | ||
| GM | 89.72% |
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.
SO has about the same amout of shares outstanding than it did 5 years ago.
SO has a worse debt/assets ratio than last year.
2.2 Solvency
SO has an Altman-Z score of 0.96. This is a bad value and indicates that SO is not financially healthy and even has some risk of bankruptcy.
SO's Altman-Z score of 0.96 is fine compared to the rest of the industry. SO outperforms 60.53% of its industry peers.
The Debt to FCF ratio of SO is 77.82, which is on the high side as it means it would take SO, 77.82 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 77.82, SO is in the better half of the industry, outperforming 60.53% of the companies in the same industry.
A Debt/Equity ratio of 1.81 is on the high side and indicates that SO has dependencies on debt financing.
SO's Debt to Equity ratio of 1.81 is on the low side compared to the rest of the industry. SO is outperformed by 76.32% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.81 | ||
| Debt/FCF | 77.82 | ||
| Altman-Z | 0.96 |
ROIC/WACC0.68
WACC6.76%
2.3 Liquidity
SO has a Current Ratio of 0.67. This is a bad value and indicates that SO is not financially healthy enough and could expect problems in meeting its short term obligations.
SO has a Current ratio of 0.67. This is in the lower half of the industry: SO underperforms 73.68% of its industry peers.
SO has a Quick Ratio of 0.67. This is a bad value and indicates that SO is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of SO (0.46) is worse than 65.79% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.67 | ||
| Quick Ratio | 0.46 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.54% over the past year.
Measured over the past 5 years, SO shows a small growth in Earnings Per Share. The EPS has been growing by 5.48% on average per year.
The Revenue has been growing slightly by 5.83% in the past year.
Measured over the past years, SO shows a small growth in Revenue. The Revenue has been growing by 4.53% on average per year.
EPS 1Y (TTM)11.54%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%-21.88%
Revenue 1Y (TTM)5.83%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%4.9%
3.2 Future
The Earnings Per Share is expected to grow by 7.14% on average over the next years.
The Revenue is expected to grow by 2.27% on average over the next years.
EPS Next Y9.27%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y7.14%
Revenue Next Year3.09%
Revenue Next 2Y3.09%
Revenue Next 3Y4.23%
Revenue Next 5Y2.27%
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 decreasing.
4. Valuation
4.1 Price/Earnings Ratio
SO is valuated rather expensively with a Price/Earnings ratio of 22.12.
SO's Price/Earnings ratio is rather expensive when compared to the industry. SO is more expensive than 81.58% of the companies in the same industry.
When comparing the Price/Earnings ratio of SO to the average of the S&P500 Index (29.98), we can say SO is valued slightly cheaper.
With a Price/Forward Earnings ratio of 20.24, SO is valued on the expensive side.
73.68% of the companies in the same industry are cheaper than SO, based on the Price/Forward Earnings ratio.
SO's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.66.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.12 | ||
| Fwd PE | 20.24 |
4.2 Price Multiples
SO's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. SO is more expensive than 65.79% of the companies in the same industry.
60.53% of the companies in the same industry are more expensive than SO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 118.1 | ||
| EV/EBITDA | 13.06 |
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)2.39
PEG (5Y)4.04
EPS Next 2Y7.92%
EPS Next 3Y7.16%
5. Dividend
5.1 Amount
SO has a Yearly Dividend Yield of 3.26%.
SO's Dividend Yield is a higher than the industry average which is at 3.48.
SO's Dividend Yield is a higher than the S&P500 average which is at 2.30.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.26% |
5.2 History
The dividend of SO has a limited annual growth rate of 1.87%.
SO has been paying a dividend for at least 10 years, so it has 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 67.12% of its income as dividend. This is not a sustainable payout ratio.
SO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP67.12%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
89.79
+1.5 (+1.7%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners70.79%
Inst Owner Change-1.42%
Ins Owners0.09%
Ins Owner Change6.01%
Market Cap98.38B
Analysts73.33
Price Target93.16 (3.75%)
Short Float %1.63%
Short Ratio3.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.26% |
Yearly Dividend2.69
Dividend Growth(5Y)1.87%
DP67.12%
Div Incr Years23
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.34%
Min EPS beat(2)-4.33%
Max EPS beat(2)3.64%
EPS beat(4)3
Avg EPS beat(4)6.38%
Min EPS beat(4)-4.33%
Max EPS beat(4)16.06%
EPS beat(8)7
Avg EPS beat(8)5.52%
EPS beat(12)10
Avg EPS beat(12)5.99%
EPS beat(16)12
Avg EPS beat(16)5.39%
Revenue beat(2)1
Avg Revenue beat(2)0.8%
Min Revenue beat(2)-3.09%
Max Revenue beat(2)4.69%
Revenue beat(4)2
Avg Revenue beat(4)0.72%
Min Revenue beat(4)-3.09%
Max Revenue beat(4)4.69%
Revenue beat(8)3
Avg Revenue beat(8)-6.6%
Revenue beat(12)7
Avg Revenue beat(12)2.25%
Revenue beat(16)10
Avg Revenue beat(16)2.94%
PT rev (1m)-0.68%
PT rev (3m)-1.99%
EPS NQ rev (1m)0.47%
EPS NQ rev (3m)7.64%
EPS NY rev (1m)-0.09%
EPS NY rev (3m)-0.31%
Revenue NQ rev (1m)-1.73%
Revenue NQ rev (3m)5.7%
Revenue NY rev (1m)-1.44%
Revenue NY rev (3m)-0.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.12 | ||
| Fwd PE | 20.24 | ||
| P/S | 3.68 | ||
| P/FCF | 118.1 | ||
| P/OCF | 10.05 | ||
| P/B | 2.96 | ||
| P/tB | 3.55 | ||
| EV/EBITDA | 13.06 |
EPS(TTM)4.06
EY4.52%
EPS(NY)4.44
Fwd EY4.94%
FCF(TTM)0.76
FCFY0.85%
OCF(TTM)8.93
OCFY9.95%
SpS24.39
BVpS30.31
TBVpS25.29
PEG (NY)2.39
PEG (5Y)4.04
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.03% | ||
| ROE | 13.25% | ||
| ROCE | 5.45% | ||
| ROIC | 4.59% | ||
| ROICexc | 4.63% | ||
| ROICexgc | 4.83% | ||
| OM | 26.37% | ||
| PM (TTM) | 16.47% | ||
| GM | 89.72% | ||
| FCFM | 3.12% |
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-Score7
Asset Turnover0.18
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.81 | ||
| Debt/FCF | 77.82 | ||
| Debt/EBITDA | 4.88 | ||
| Cap/Depr | 170.05% | ||
| Cap/Sales | 33.51% | ||
| Interest Coverage | 2.78 | ||
| Cash Conversion | 79.49% | ||
| Profit Quality | 18.93% | ||
| Current Ratio | 0.67 | ||
| Quick Ratio | 0.46 | ||
| Altman-Z | 0.96 |
F-Score7
WACC6.76%
ROIC/WACC0.68
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)11.54%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%-21.88%
EPS Next Y9.27%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y7.14%
Revenue 1Y (TTM)5.83%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%4.9%
Revenue Next Year3.09%
Revenue Next 2Y3.09%
Revenue Next 3Y4.23%
Revenue Next 5Y2.27%
EBIT growth 1Y23.31%
EBIT growth 3Y10.62%
EBIT growth 5Y5.63%
EBIT Next Year80.6%
EBIT Next 3Y26.08%
EBIT Next 5Y20.76%
FCF growth 1Y154.02%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y29.59%
OCF growth 3Y16.63%
OCF growth 5Y11.11%