Valued at a market cap of $94.5 billion, The Southern Company (SO) engages in the generation, transmission, and distribution of electricity. Based in Atlanta, Georgia, the company also develops and manages power generation assets, including renewable energy projects and provides gas distribution and marketing services as well.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Southern Company fits this criterion perfectly. Southern Company’s valuation above this mark is not surprising, considering it serves approximately nine million electric and gas utility customers through its several wholesale and retail electric and natural gas distribution units, making the company one of the largest utilities in the United States.
Despite experiencing a 2.8% decline from its 52-week high of $89.68, reached on Aug. 5, shares of SO have gained 8.4% over the past three months, outpacing the Utilities Select Sector SPDR Fund’s (XLU) 5.9% return over the same time frame.
Longer term, SO stock is up 24.3.% on a YTD basis, outperforming XLU’s 20.2% gains. Moreover, shares of Southern Company have gained 29.7% over the past 52 weeks, surpassing XLU’s 21.6% return over the same time frame.
SO has been trading above its 200-day moving average since April and has also remained mostly above its 50-day moving average during this period, despite some fluctuations, indicating a bullish trend.
SO’s outperformance is primarily driven by the company’s strategic initiatives, including the construction of two nuclear power plants near Augusta, Georgia, expansion of data centers, a focus on continuous research and development, and capitalizing on favorable economic and environmental factors. Moreover, the stock jumped 4.9% on Aug. 1 following its better-than-expected Q2 earnings release, driven by continued investment in state-regulated utilities and warmer weather, which led to increased electricity sales.
Its rival, American Electric Power Company, Inc. (AEP), has gained 29.5% over the past 52 weeks and has risen 23.6% on a YTD basis, slightly lagging behind SO over the same time frame, respectively.
Despite the stock outperforming the broader sector, analysts remain cautiously optimistic about its prospects. SO has a consensus rating of “Moderate Buy” from the 20 analysts covering the stock, and as of writing, the stock is trading above the mean price target of $83.31.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
