SOUTHERN CO/THE (SO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:SO - US8425871071 - Common Stock
87.54 USD
+0.03 (+0.03%)
87.54 USD
0 (0%)
Taking everything into account, SO scores 4 out of 10 in our fundamental rating. SO was compared to 46 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 valied quite expensively at the moment, while it does show a decent growth rate. SO also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year SO was profitable.
- In the past year SO had a positive cash flow from operations.
- In the past 5 years SO has always been profitable.
- In the past 5 years SO always reported a positive cash flow from operatings.
1.2 Ratios
- With a Return On Assets value of 2.91%, SO perfoms like the industry average, outperforming 52.17% of the companies in the same industry.
- Looking at the Return On Equity, with a value of 12.74%, SO is in the better half of the industry, outperforming 67.39% of the companies in the same industry.
- SO's Return On Invested Capital of 4.62% is fine compared to the rest of the industry. SO outperforms 65.22% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for SO is in line with the industry average of 4.58%.
- The last Return On Invested Capital (4.62%) for SO is above the 3 year average (4.14%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.91% | ||
| ROE | 12.74% | ||
| ROIC | 4.62% |
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
- The Profit Margin of SO (15.42%) is better than 63.04% 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 25.68%, SO is in the better half of the industry, outperforming 71.74% 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.
- With an excellent Gross Margin value of 89.28%, SO belongs to the best of the industry, outperforming 80.43% of the companies in the same industry.
- 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 | 25.68% | ||
| PM (TTM) | 15.42% | ||
| GM | 89.28% |
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.
- 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 0.94. 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 0.94 is in line compared to the rest of the industry. SO outperforms 58.70% of its industry peers.
- A Debt/Equity ratio of 1.85 is on the high side and indicates that SO has dependencies on debt financing.
- SO's Debt to Equity ratio of 1.85 is on the low side compared to the rest of the industry. SO is outperformed by 84.78% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.85 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.94 |
ROIC/WACC0.69
WACC6.71%
2.3 Liquidity
- SO has a Current Ratio of 0.75. 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 0.75. This is in the lower half of the industry: SO underperforms 65.22% of its industry peers.
- A Quick Ratio of 0.56 indicates that SO may have some problems paying its short term obligations.
- SO's Quick ratio of 0.56 is on the low side compared to the rest of the industry. SO is outperformed by 69.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.75 | ||
| Quick Ratio | 0.56 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 1.19% 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.
- Looking at the last year, SO shows a quite strong growth in Revenue. The Revenue has grown by 9.40% in the last year.
- SO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.53% yearly.
EPS 1Y (TTM)1.19%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%11.89%
Revenue 1Y (TTM)9.4%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%7.55%
3.2 Future
- The Earnings Per Share is expected to grow by 7.36% on average over the next years.
- The Revenue is expected to grow by 6.66% on average over the next years.
EPS Next Y8.88%
EPS Next 2Y7.77%
EPS Next 3Y7.68%
EPS Next 5Y7.36%
Revenue Next Year7.91%
Revenue Next 2Y6.46%
Revenue Next 3Y5.96%
Revenue Next 5Y6.66%
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 accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 20.60, SO is valued on the expensive side.
- Based on the Price/Earnings ratio, SO is valued a bit more expensive than 60.87% of the companies in the same industry.
- When comparing the Price/Earnings ratio of SO to the average of the S&P500 Index (27.21), we can say SO is valued slightly cheaper.
- SO is valuated rather expensively with a Price/Forward Earnings ratio of 18.56.
- SO's Price/Forward Earnings ratio is in line with the industry average.
- SO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.26.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.6 | ||
| Fwd PE | 18.56 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SO indicates a slightly more expensive valuation: SO is more expensive than 63.04% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.51 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates SO does not grow enough to justify the current Price/Earnings ratio.
- SO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.32
PEG (5Y)3.76
EPS Next 2Y7.77%
EPS Next 3Y7.68%
5. Dividend
5.1 Amount
- SO has a Yearly Dividend Yield of 3.33%.
- Compared to an average industry Dividend Yield of 2.93, SO pays a bit more dividend than its industry peers.
- SO's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.33% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)1.87%
Div Incr Years23
Div Non Decr Years34
5.3 Sustainability
- 67.01% of the earnings are spent on dividend by SO. This is not a sustainable payout ratio.
- The dividend of SO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP67.01%
EPS Next 2Y7.77%
EPS Next 3Y7.68%
SOUTHERN CO/THE / SO FAQ
What is the fundamental rating for SO stock?
ChartMill assigns a fundamental rating of 4 / 10 to SO.
What is the valuation status of SOUTHERN CO/THE (SO) stock?
ChartMill assigns a valuation rating of 2 / 10 to SOUTHERN CO/THE (SO). This can be considered as Overvalued.
How profitable is SOUTHERN CO/THE (SO) stock?
SOUTHERN CO/THE (SO) has a profitability rating of 7 / 10.
Can you provide the financial health for SO stock?
The financial health rating of SOUTHERN CO/THE (SO) is 1 / 10.
Can you provide the dividend sustainability for SO stock?
The dividend rating of SOUTHERN CO/THE (SO) is 7 / 10 and the dividend payout ratio is 67.01%.