SOUTHERN CO/THE (SO)
US8425871071 - Common Stock
We assign a fundamental rating of 5 out of 10 to SO. SO was compared to 47 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.
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 better Return On Assets (3.28%) than 66.67% of its industry peers.
SO has a better Return On Equity (14.18%) than 77.78% of its industry peers.
Looking at the Return On Invested Capital, with a value of 4.46%, SO is in the better half of the industry, outperforming 71.11% 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 4.67%.
The 3 year average ROIC (3.85%) for SO is below the current ROIC(4.46%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.28% | ||
| ROE | 14.18% | ||
| ROIC | 4.46% |
ROA(3y)2.45%
ROA(5y)2.77%
ROE(3y)10.91%
ROE(5y)12.16%
ROIC(3y)3.85%
ROIC(5y)3.94%
1.3 Margins
SO has a Profit Margin of 17.87%. This is amongst the best in the industry. SO outperforms 86.67% of its industry peers.
In the last couple of years the Profit Margin of SO has grown nicely.
SO has a better Operating Margin (26.37%) than 84.44% of its industry peers.
SO's Operating Margin has been stable in the last couple of years.
SO has a better Gross Margin (89.36%) than 84.44% 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 | 26.37% | ||
| PM (TTM) | 17.87% | ||
| GM | 89.36% |
OM growth 3Y-3.35%
OM growth 5Y0.57%
PM growth 3Y0.94%
PM growth 5Y10.69%
GM growth 3Y-0.72%
GM growth 5Y0.44%
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.
Compared to 5 years ago, SO has more shares outstanding
Compared to 1 year ago, SO has a worse debt to assets ratio.
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 better Altman-Z score (0.99) than 62.22% of its industry peers.
The Debt to FCF ratio of SO is 92.47, which is on the high side as it means it would take SO, 92.47 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 92.47, SO is doing good in the industry, outperforming 64.44% of the companies in the same industry.
SO has a Debt/Equity ratio of 1.86. This is a high value indicating a heavy dependency on external financing.
SO has a worse Debt to Equity ratio (1.86) than 84.44% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.86 | ||
| Debt/FCF | 92.47 | ||
| Altman-Z | 0.99 |
ROIC/WACC0.66
WACC6.77%
2.3 Liquidity
A Current Ratio of 0.91 indicates that SO may have some problems paying its short term obligations.
SO has a Current ratio (0.91) which is comparable to the rest of the industry.
A Quick Ratio of 0.63 indicates that SO may have some problems paying its short term obligations.
SO has a Quick ratio of 0.63. This is in the lower half of the industry: SO underperforms 64.44% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.63 |
3. Growth
3.1 Past
SO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 28.83%, which is quite impressive.
Measured over the past 5 years, SO shows a small growth in Earnings Per Share. The EPS has been growing by 3.46% on average per year.
SO shows a small growth in Revenue. In the last year, the Revenue has grown by 0.66%.
The Revenue has been growing slightly by 1.45% on average over the past years.
EPS 1Y (TTM)28.83%
EPS 3Y3.85%
EPS 5Y3.46%
EPS Q2Q%0.7%
Revenue 1Y (TTM)0.66%
Revenue growth 3Y7.42%
Revenue growth 5Y1.45%
Sales Q2Q%4.21%
3.2 Future
The Earnings Per Share is expected to grow by 7.58% on average over the next years.
The Revenue is expected to grow by 3.58% on average over the next years.
EPS Next Y14.58%
EPS Next 2Y10.63%
EPS Next 3Y9.29%
EPS Next 5Y7.58%
Revenue Next Year-2.36%
Revenue Next 2Y0.63%
Revenue Next 3Y1.47%
Revenue Next 5Y3.58%
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 accelerating.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 20.99 indicates a rather expensive valuation of SO.
SO's Price/Earnings ratio is a bit more expensive when compared to the industry. SO is more expensive than 68.89% of the companies in the same industry.
When comparing the Price/Earnings ratio of SO to the average of the S&P500 Index (28.96), we can say SO is valued slightly cheaper.
With a Price/Forward Earnings ratio of 19.79, SO is valued on the expensive side.
73.33% 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 23.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.99 | ||
| Fwd PE | 19.79 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, SO is valued a bit more expensive than the industry average as 71.11% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, SO is valued a bit cheaper than 64.44% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 140.37 | ||
| EV/EBITDA | 13.02 |
4.3 Compensation for Growth
SO's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
SO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.44
PEG (5Y)6.06
EPS Next 2Y10.63%
EPS Next 3Y9.29%
5. Dividend
5.1 Amount
SO has a Yearly Dividend Yield of 3.32%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.44, SO has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.23, SO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.32% |
5.2 History
The dividend of SO has a limited annual growth rate of 2.61%.
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)2.61%
Div Incr Years22
Div Non Decr Years33
5.3 Sustainability
63.19% 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.
DP63.19%
EPS Next 2Y10.63%
EPS Next 3Y9.29%
SOUTHERN CO/THE
NYSE:SO (11/21/2024, 8:04:00 PM)
Premarket: 88.15 +0.01 (+0.01%)88.14
+0.17 (+0.19%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap96.57B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.32% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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Revenue beat(2)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.99 | ||
| Fwd PE | 19.79 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.44
PEG (5Y)6.06
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.28% | ||
| ROE | 14.18% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 26.37% | ||
| PM (TTM) | 17.87% | ||
| GM | 89.36% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.18
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.86 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.63 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)28.83%
EPS 3Y3.85%
EPS 5Y
EPS Q2Q%
EPS Next Y14.58%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)0.66%
Revenue growth 3Y7.42%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y