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1. Company Snapshot

1.a. Company Description

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity.It operates through Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services segments.The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations.


In addition, it owns and/or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, three nuclear generating stations, 13 combined cycle/cogeneration stations, 45 solar facilities, 15 wind facilities, one fuel cell facility, and four battery storage facility; and constructs, operates, and maintains 76,289 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers.The company serves approximately 8.7 million electric and gas utility customers.Further, the company offers digital wireless communications and fiber optics services.


The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.

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1.b. Last Insights on SO

The recent stock performance of The Southern Company was negatively driven by a decline in earnings per share (EPS) guidance, despite beating Q3 estimates. The company's Q3 EPS of $1.43 per share exceeded expectations, but its revenue growth was lower than anticipated. Additionally, Southern Company's operating expenses increased, partly due to higher fuel costs and maintenance expenses. The company's ability to manage these expenses will be crucial in the coming quarters.

1.c. Company Highlights

2. Southern Company's Q3 2025 Earnings: A Strong Performance

Southern Company reported a robust financial performance for the third quarter of 2025, with adjusted earnings per share (EPS) of $1.60, surpassing the estimated $1.51. The company's revenue growth was driven by a 1.8% increase in weather-normal retail electricity sales compared to the same period last year, with the commercial sector experiencing a 3.5% growth. The strong performance was also attributed to the signing of four large load contracts in the last two months, representing over 2 gigawatts of demand. David Poroch, Chief Financial Officer, noted that the minimum bills cover all costs, and once they hit their ramps, it's beneficial for the company and customers.

Publication Date: Nov -01

📋 Highlights
  • Adjusted EPS Surpassed Estimates:: Q3 2025 adjusted EPS was $1.60/share, $0.10 above guidance and $0.17 higher than Q3 2024 ($1.43/share).
  • Capital Investment Plan:: $76 billion in total capital investments planned, with $9 billion in equity financing targeted by 2029; $7 billion of equity secured via issuances and agreements.
  • Large Load Contracts Progress:: 4 contracts signed in 2 months, representing >2 gigawatts of demand, including data centers driving 17% YoY growth in the data center portfolio.
  • Weather-Normal Sales Growth:: Year-to-date retail electricity sales up 1.8% vs. 2024, with commercial sector sales rising 3.5% on a weather-normal basis in Q3.
  • Georgia PSC Compliance & Minimum Bills:: Minimum bills cover all costs under new Georgia regulations, supporting $4 billion in incremental capital needs if approvals are granted, with 40% equity financing.

Revenue Growth and Margin Analysis

The company's revenue growth is expected to continue, with analysts estimating a 5.0% growth in revenues for the next year. The strong demand and large load contracts signed during the quarter are expected to drive this growth. The company's adjusted EPS estimate for the fourth quarter is $0.54 per share, which would put the full-year adjusted earnings at the top of the 2025 annual guidance range of $4.30 per share.

Valuation Metrics

To understand what's priced into Southern Company's stock, we can look at its valuation metrics. The company has a Price-to-Earnings (P/E) Ratio of 23.24, a Price-to-Book (P/B) Ratio of 2.71, and a Dividend Yield of 3.11%. The EV/EBITDA ratio stands at 13.57, indicating a reasonable valuation. The ROE is 12.8%, indicating a decent return on equity. These metrics suggest that the stock is reasonably valued, considering its growth prospects and dividend yield.

Future Outlook and Capital Investment

Southern Company is confident about its future prospects, with a $76 billion capital investment plan in place. The company has issued $4 billion of long-term debt across its subsidiaries and is on track to source $9 billion of equity by 2029. The company's equity financing plans are progressing well, with over $7 billion solidified through various issuances and forward sales agreements. Chris Womack, Chairman, President, and Chief Executive Officer, expressed confidence in the company's ability to deliver exceptional value to customers and investors.

Regulatory Environment and Nuclear Development

The company's progress in Georgia is notable, with the Georgia Public Service Commission's new rules supporting the company's long-term commitments. The company is also excited about the potential for new nuclear units, which could have 60- to 80-year lives, meeting current and future demand. Christopher Womack expressed excitement about the federal government's actions and the potential for new nuclear development.

3. NewsRoom

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Southern Company Foundation Awards $3M for HBCU Endowed Professorships

Dec -04

Source: globenewswire.com

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Fisher Asset Management LLC Raises Stake in Southern Company (The) $SO

Dec -04

Source: defenseworld.net

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Southern Company Pledges Steady Customer Rates Through 2027

Dec -03

Source: zacks.com

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DevvStream and Southern Energy Renewables Announce Business Combination Targeting Low-Cost Production of Carbon-Negative SAF and Green Methanol

Dec -03

Source: businesswire.com

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Alabama Power Commits to Steady Rates Through 2027

Dec -02

Source: prnewswire.com

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Southern Silver Intersects 10.5 metres averaging 1,115g/t AgEq at Cerro Las Minitas Project in Durango, México

Dec -01

Source: newsfilecorp.com

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Southern Cross Gold Receives Work Plan Approval for Exploration Tunnel at Sunday Creek

Nov -27

Source: newsfilecorp.com

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Baltimore Washington Financial Advisors Inc. Raises Stake in Southern Company (The) $SO

Nov -27

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.20%)

6. Segments

Electric Utilities - Traditional Electric Operating Companies

Expected Growth: 4.0%

The demand for electricity is consistent, and while there's a push towards renewable energy, traditional utilities remain a significant part of the energy mix, supporting a growth rate slightly below the global average due to potential regulatory and environmental factors.

Eliminations

Expected Growth: 4.5%

With natural gas being a cleaner alternative to coal and the ongoing infrastructure investments, gas distribution operations are poised for growth slightly above the global average, driven by increasing demand and infrastructure expansion.

Southern Company Gas - Gas Distribution Operations

Expected Growth: None%

None

Electric Utilities - Southern Power

Expected Growth: 5.0%

With a focus on renewable energy and competitive wholesale markets, Southern Power is positioned for higher growth, driven by the increasing demand for clean energy and the company's investment in renewable generation capacity.

All Other

Expected Growth: 4.2%

As a catch-all category, 'All Other' is assumed to grow at the global average rate, reflecting a mix of different business activities and investments with varied growth prospects.

Southern Company Gas - Gas Marketing Services

Expected Growth: 4.8%

With the competitive nature of gas marketing and the push for natural gas as a cleaner energy source, this segment is expected to grow above the global average, driven by customer acquisition and retention efforts.

Southern Company Gas - Gas Pipeline Investments

Expected Growth: 5.5%

Investments in gas pipeline infrastructure are critical for the energy transition and are expected to grow significantly, driven by the need to transport natural gas efficiently and safely, thus supporting a higher growth rate.

Southern Company Gas - ALL Other

Expected Growth: 4.2%

As a diverse category within the gas segment, 'ALL Other' is assumed to grow at the global average, reflecting the mixed nature of the businesses and activities included.

7. Detailed Products

Electricity Generation

The Southern Company generates electricity through various sources including fossil fuels, nuclear, and renewable energy.

Electricity Transmission

The Southern Company owns and operates a vast network of transmission lines, substations, and switchyards to transport electricity.

Electricity Distribution

The Southern Company distributes electricity to customers through a network of power lines, transformers, and distribution substations.

Natural Gas Distribution

The Southern Company distributes natural gas to customers through a network of pipelines and distribution systems.

Renewable Energy Solutions

The Southern Company offers renewable energy solutions, including solar, wind, and biomass energy.

Energy Efficiency Services

The Southern Company offers energy efficiency services, including energy audits, retrofitting, and energy management solutions.

Smart Grid Solutions

The Southern Company implements smart grid technologies to enhance grid reliability, efficiency, and customer experience.

8. The Southern Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The Southern Company is medium due to the presence of alternative energy sources such as solar and wind power. However, the company's diversified energy portfolio and strong brand presence mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers for The Southern Company is low due to the lack of alternative energy providers in the region. The company's strong market presence and diversified energy portfolio also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for The Southern Company is medium due to the presence of multiple fuel suppliers. However, the company's large scale of operations and diversified energy portfolio reduce the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants for The Southern Company is low due to the high barriers to entry in the energy industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for The Southern Company is high due to the presence of multiple energy providers in the region, including Duke Energy and Exelon. The company's strong brand presence and diversified energy portfolio help to mitigate this threat.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 66.88%
Debt Cost 4.35%
Equity Weight 33.12%
Equity Cost 6.32%
WACC 5.00%
Leverage 201.91%

11. Quality Control: The Southern Company passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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American Electric Power

A-Score: 6.9/10

Value: 5.7

Growth: 4.6

Quality: 6.8

Yield: 7.0

Momentum: 7.5

Volatility: 10.0

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Edison

A-Score: 6.4/10

Value: 8.3

Growth: 5.3

Quality: 7.5

Yield: 9.0

Momentum: 1.0

Volatility: 7.3

1-Year Total Return ->

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Duke Energy

A-Score: 6.4/10

Value: 5.5

Growth: 4.7

Quality: 4.6

Yield: 7.0

Momentum: 6.5

Volatility: 10.0

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Southern

A-Score: 6.0/10

Value: 2.5

Growth: 4.8

Quality: 5.5

Yield: 7.0

Momentum: 6.5

Volatility: 10.0

1-Year Total Return ->

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ConEd

A-Score: 5.9/10

Value: 6.1

Growth: 4.2

Quality: 4.9

Yield: 7.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

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PSEG

A-Score: 5.5/10

Value: 5.0

Growth: 3.8

Quality: 4.6

Yield: 6.0

Momentum: 3.5

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

86.28$

Current Price

86.28$

Potential

-0.00%

Expected Cash-Flows