SOUTHERN CO/THE (SO) Stock Fundamental Analysis
USA - NYSE:SO - US8425871071 - Common Stock
92.28 USD
+0.01 (+0.01%)
92.7959 USD
+0.52 (+0.56%)
We assign a fundamental rating of 4 out of 10 to SO. SO was compared to 48 industry peers in the Electric Utilities industry. SO scores excellent on profitability, but 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.
SO had a positive operating cash flow in the past year.
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
Looking at the Return On Assets, with a value of 2.88%, SO is in line with its industry, outperforming 47.92% of the companies in the same industry.
SO's Return On Equity of 12.59% is fine compared to the rest of the industry. SO outperforms 72.92% of its industry peers.
The Return On Invested Capital of SO (4.53%) is better than 60.42% of its industry peers.
SO had an Average Return On Invested Capital over the past 3 years of 4.14%. This is in line with the industry average of 5.43%.
The 3 year average ROIC (4.14%) for SO is below the current ROIC(4.53%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.88% | ||
| ROE | 12.59% | ||
| ROIC | 4.53% |
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 (15.10%) is better than 62.50% of its industry peers.
In the last couple of years the Profit Margin of SO has declined.
SO's Operating Margin of 25.39% is fine compared to the rest of the industry. SO outperforms 72.92% of its industry peers.
SO's Operating Margin has been stable in the last couple of years.
SO's Gross Margin of 89.14% is amongst the best of the industry. SO outperforms 83.33% of its industry peers.
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 | 25.39% | ||
| PM (TTM) | 15.1% | ||
| GM | 89.14% |
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), SO is destroying value.
Compared to 1 year ago, SO has about the same amount of shares outstanding.
The number of shares outstanding for SO remains at a similar level compared to 5 years ago.
SO has a worse debt/assets ratio than last year.
2.2 Solvency
SO has an Altman-Z score of 0.99. This is a bad value and indicates that SO is not financially healthy and even has some risk of bankruptcy.
SO has a Altman-Z score (0.99) which is comparable to the rest of the industry.
A Debt/Equity ratio of 1.88 is on the high side and indicates that SO has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.88, SO is doing worse than 89.58% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.99 |
ROIC/WACC0.68
WACC6.66%
2.3 Liquidity
SO has a Current Ratio of 0.74. 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 worse Current ratio (0.74) than 64.58% of its industry peers.
SO has a Quick Ratio of 0.74. This is a bad value and indicates that SO is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.53, SO is not doing good in the industry: 64.58% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
SO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.63%.
The Earnings Per Share has been growing slightly by 5.48% on average over the past years.
SO shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.53%.
The Revenue has been growing slightly by 4.53% on average over the past years.
EPS 1Y (TTM)-2.63%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%-16.36%
Revenue 1Y (TTM)8.53%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%7.89%
3.2 Future
SO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.73% yearly.
SO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.39% yearly.
EPS Next Y8.18%
EPS Next 2Y7.75%
EPS Next 3Y7.5%
EPS Next 5Y6.73%
Revenue Next Year6.83%
Revenue Next 2Y5.74%
Revenue Next 3Y5.31%
Revenue Next 5Y4.39%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 22.62, the valuation of SO can be described as rather expensive.
Based on the Price/Earnings ratio, SO is valued more expensive than 81.25% of the companies in the same industry.
SO's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.27.
The Price/Forward Earnings ratio is 19.58, which indicates a rather expensive current valuation of SO.
77.08% of the companies in the same industry are cheaper than SO, based on the Price/Forward Earnings ratio.
SO is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.77, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.62 | ||
| Fwd PE | 19.58 |
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 70.83% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 13.22 |
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)2.76
PEG (5Y)4.13
EPS Next 2Y7.75%
EPS Next 3Y7.5%
5. Dividend
5.1 Amount
SO has a Yearly Dividend Yield of 3.21%.
Compared to an average industry Dividend Yield of 3.47, SO pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.38, SO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.21% |
5.2 History
The dividend of SO has a limited annual growth rate of 1.87%.
SO has paid a dividend for at least 10 years, which is 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
69.13% of the earnings are spent on dividend by SO. This is not a sustainable payout ratio.
SO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP69.13%
EPS Next 2Y7.75%
EPS Next 3Y7.5%
92.28
+0.01 (+0.01%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners71.53%
Inst Owner Change2.91%
Ins Owners0.09%
Ins Owner Change-1.29%
Market Cap101.51B
Analysts75.17
Price Target98.47 (6.71%)
Short Float %3.14%
Short Ratio6.73
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.21% |
Yearly Dividend2.69
Dividend Growth(5Y)1.87%
DP69.13%
Div Incr Years23
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.19%
Min EPS beat(2)-0.3%
Max EPS beat(2)-0.07%
EPS beat(4)1
Avg EPS beat(4)-0.26%
Min EPS beat(4)-4.33%
Max EPS beat(4)3.64%
EPS beat(8)5
Avg EPS beat(8)4.09%
EPS beat(12)8
Avg EPS beat(12)3.62%
EPS beat(16)10
Avg EPS beat(16)4.3%
Revenue beat(2)2
Avg Revenue beat(2)6.53%
Min Revenue beat(2)5.3%
Max Revenue beat(2)7.77%
Revenue beat(4)3
Avg Revenue beat(4)3.67%
Min Revenue beat(4)-3.09%
Max Revenue beat(4)7.77%
Revenue beat(8)4
Avg Revenue beat(8)-3.54%
Revenue beat(12)7
Avg Revenue beat(12)0.31%
Revenue beat(16)10
Avg Revenue beat(16)3.47%
PT rev (1m)0.65%
PT rev (3m)2.98%
EPS NQ rev (1m)0.25%
EPS NQ rev (3m)0.24%
EPS NY rev (1m)-0.25%
EPS NY rev (3m)-0.27%
Revenue NQ rev (1m)0.04%
Revenue NQ rev (3m)4.44%
Revenue NY rev (1m)1.52%
Revenue NY rev (3m)1.71%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.62 | ||
| Fwd PE | 19.58 | ||
| P/S | 3.58 | ||
| P/FCF | N/A | ||
| P/OCF | 11.01 | ||
| P/B | 2.98 | ||
| P/tB | 3.56 | ||
| EV/EBITDA | 13.22 |
EPS(TTM)4.08
EY4.42%
EPS(NY)4.71
Fwd EY5.11%
FCF(TTM)-0.98
FCFYN/A
OCF(TTM)8.38
OCFY9.08%
SpS25.78
BVpS30.92
TBVpS25.94
PEG (NY)2.76
PEG (5Y)4.13
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.88% | ||
| ROE | 12.59% | ||
| ROCE | 5.36% | ||
| ROIC | 4.53% | ||
| ROICexc | 4.57% | ||
| ROICexgc | 4.76% | ||
| OM | 25.39% | ||
| PM (TTM) | 15.1% | ||
| GM | 89.14% | ||
| FCFM | N/A |
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-Score4
Asset Turnover0.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.02 | ||
| Cap/Depr | 185.4% | ||
| Cap/Sales | 36.3% | ||
| Interest Coverage | 2.78 | ||
| Cash Conversion | 72.29% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.53 | ||
| Altman-Z | 0.99 |
F-Score4
WACC6.66%
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)-2.63%
EPS 3Y5.99%
EPS 5Y5.48%
EPS Q2Q%-16.36%
EPS Next Y8.18%
EPS Next 2Y7.75%
EPS Next 3Y7.5%
EPS Next 5Y6.73%
Revenue 1Y (TTM)8.53%
Revenue growth 3Y4.96%
Revenue growth 5Y4.53%
Sales Q2Q%7.89%
Revenue Next Year6.83%
Revenue Next 2Y5.74%
Revenue Next 3Y5.31%
Revenue Next 5Y4.39%
EBIT growth 1Y4.8%
EBIT growth 3Y10.62%
EBIT growth 5Y5.63%
EBIT Next Year84.71%
EBIT Next 3Y28.42%
EBIT Next 5Y16.78%
FCF growth 1Y63.92%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y63.97%
OCF growth 3Y16.63%
OCF growth 5Y11.11%