SOUTHERN CO/THE (SO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:SO - US8425871071 - Common Stock
89.04 USD
+0.2 (+0.23%)
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. SO scores excellent on profitability, but there are concerns on its financial health. SO is quite expensive at the moment. It does show a decent growth rate. Finally SO also has an excellent dividend rating.
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.
- SO had a positive operating cash flow in each of the past 5 years.
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.
- The Return On Equity of SO (12.74%) is better than 67.39% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 4.62%, SO is in the better half of the industry, outperforming 65.22% 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 4.58%.
- 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
- SO's Profit Margin of 15.42% is fine compared to the rest of the industry. SO outperforms 63.04% of its industry peers.
- In the last couple of years the Profit Margin of SO has declined.
- SO has a Operating Margin of 25.68%. This is in the better half of the industry: SO outperforms 71.74% of its industry peers.
- SO's Operating Margin has been stable in the last couple of years.
- SO has a better Gross Margin (89.28%) than 80.43% of its industry peers.
- SO's Gross Margin has been stable in the last couple of years.
| 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
- With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), SO is destroying value.
- SO has about the same amout of shares outstanding than it did 1 year ago.
- Compared to 5 years ago, SO has about the same amount of 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 0.95. This is a bad value and indicates that SO is not financially healthy and even has some risk of bankruptcy.
- Looking at the Altman-Z score, with a value of 0.95, SO is in line with its industry, outperforming 58.70% of the companies in the same industry.
- A Debt/Equity ratio of 1.85 is on the high side and indicates that SO has dependencies on debt financing.
- The Debt to Equity ratio of SO (1.85) is worse than 84.78% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.85 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.95 |
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.
- The Current ratio of SO (0.75) is worse than 65.22% of its industry peers.
- A Quick Ratio of 0.56 indicates that SO may have some problems paying its short term obligations.
- Looking at the Quick ratio, with a value of 0.56, SO is doing worse than 69.57% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.75 | ||
| Quick Ratio | 0.56 |
3. Growth
3.1 Past
- SO shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 1.19%.
- 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 grown by 9.40% in the past year. This is quite good.
- 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)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
- Based on estimates for the next years, SO will show a small growth in Earnings Per Share. The EPS will grow by 7.36% on average per year.
- 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 Year8.51%
Revenue Next 2Y6.82%
Revenue Next 3Y6.3%
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
- Based on the Price/Earnings ratio of 20.95, the valuation of SO can be described as rather expensive.
- Based on the Price/Earnings ratio, SO is valued a bit more expensive than the industry average as 60.87% of the companies are valued more cheaply.
- The average S&P500 Price/Earnings ratio is at 28.82. SO is valued slightly cheaper when compared to this.
- A Price/Forward Earnings ratio of 18.88 indicates a rather expensive valuation of SO.
- SO's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. SO is more expensive than 60.87% of the companies in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 25.95. SO is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.95 | ||
| Fwd PE | 18.88 |
4.2 Price Multiples
- 63.04% of the companies in the same industry are cheaper than SO, based on the Enterprise Value to EBITDA ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.62 |
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)2.36
PEG (5Y)3.83
EPS Next 2Y7.77%
EPS Next 3Y7.68%
5. Dividend
5.1 Amount
- SO has a Yearly Dividend Yield of 3.38%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 2.90, 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 | 3.38% |
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
- 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%.