SOUTHERN CO/THE (SO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:SO - US8425871071 - Common Stock
89.34 USD
+1.01 (+1.14%)
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 belongs to the best of the industry regarding profitability, there are concerns on its financial health. While showing a medium growth rate, SO is valued expensive at the moment. SO also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year SO was profitable.
- SO had a positive operating cash flow in the past year.
- Each year in the past 5 years SO has been profitable.
- Each year in the past 5 years SO had a positive operating cash flow.
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.
- SO has a better Return On Equity (12.74%) 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 3 year average ROIC (4.14%) for SO is below the current ROIC(4.62%), indicating increased profibility in the last year.
| 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.
- Looking at the Gross Margin, with a value of 89.28%, SO belongs to the top of the industry, outperforming 80.43% of the companies in the same industry.
- 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
- 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.
- The number of shares outstanding for SO remains at a similar level compared to 5 years ago.
- The debt/assets ratio for SO is higher compared to a year ago.
2.2 Solvency
- Based on the Altman-Z score of 0.95, we must say that SO is in the distress zone and has some risk of bankruptcy.
- With a Altman-Z score value of 0.95, SO perfoms like the industry average, 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.
- Looking at the Debt to Equity ratio, with a value of 1.85, SO is doing worse than 84.78% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.85 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.95 |
ROIC/WACC0.69
WACC6.72%
2.3 Liquidity
- A Current Ratio of 0.75 indicates that SO may have some problems paying its short term obligations.
- Looking at the Current ratio, with a value of 0.75, SO is doing worse than 65.22% of the companies in the same industry.
- A Quick Ratio of 0.56 indicates that SO may have some problems paying its short term obligations.
- SO has a worse Quick ratio (0.56) than 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.
- The Earnings Per Share has been growing slightly by 5.48% on average over the past years.
- The Revenue has grown by 9.40% in the past year. This is quite good.
- 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
- SO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.36% yearly.
- 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
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 21.02, the valuation of SO can be described as rather expensive.
- 63.04% of the companies in the same industry are cheaper than SO, based on the Price/Earnings ratio.
- When comparing the Price/Earnings ratio of SO to the average of the S&P500 Index (28.60), we can say SO is valued slightly cheaper.
- With a Price/Forward Earnings ratio of 18.95, SO is valued on the expensive side.
- Based on the Price/Forward Earnings ratio, SO is valued a bit more expensive than 60.87% of the companies in the same industry.
- SO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.02 | ||
| Fwd PE | 18.95 |
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 63.04% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.58 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The decent profitability rating of SO may justify a higher PE ratio.
PEG (NY)2.37
PEG (5Y)3.84
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 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
- SO pays out 67.01% of its income as dividend. 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%.