The Southern Company (SO), founded in 1945, is one of the largest utilities in the U.S., with a market cap of $84.9 billion. Based in Atlanta, the company powers the future through its subsidiaries by generating, transmitting, and distributing electricity across the Southeast. With a strong focus on innovation, they manage renewable energy projects, distribute natural gas in four states, and operate diverse energy facilities, including nuclear and solar. Serving roughly 9 million customers, Southern Company is at the forefront of energy resilience, microgrids, and digital communications, blending tradition with cutting-edge solutions.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Southern Company fits this criterion perfectly. This stature is attributed to its robust energy portfolio, consistent innovation, expansive customer base, strategic acquisitions, consistent dividend payouts, and exclusive service territories, which have solidified its financial foundation, driving sustained growth in shareholder value and reinforcing its market position.
However, the leading U.S. wholesale energy provider has slipped 3.6% from its 52-week high of $80.84, achieved on June 4. Shares of Southern Company have gained 12.3% over the past three months, outperforming the S&P 500 Utilities Sector SPDR’s (XLU) 9.4% gains over the same time frame.
In the longer term, SO stock has cruised up 11.2% on a YTD basis and climbed 8.6% over the past 52 weeks, easily outpacing XLU's 9.3% returns in 2024 and 2.8% gains over the past year.
To confirm the bullish price trend, SO has been trading above its 50-day and 200-day moving averages since mid-April.
Southern Company’s impressive price performance stems from strategic initiatives and favorable market conditions. Leading the utility sector, it has constructed two nuclear power plants near Augusta, Georgia, positioning itself at the forefront of carbon-free energy production for decades. Additionally, heavy investments in state-regulated utilities have yielded significant returns, while favorable weather conditions have boosted energy consumption compared to last year. Notably, data centers in the commercial sector have shown higher weather-adjusted sales, reflecting robust local economies and rising energy demands.
In 2024, Southern Company’s focus on clean energy infrastructure and capitalizing on economic and environmental factors have strengthened its financial standing. The market cheered on April 22 when Southern Company raised its quarterly dividend by two cents to $0.72 per share, marking the 23rd consecutive year of dividend hikes. Furthermore, Southern Company’s Q1 earnings results on May 2 saw shares rise over 1% as revenue grew 2.3% annually to $6.6 billion, and EPS surged 30.4% to $1.03, beating projections by 14.4%.
To highlight the stock’s outperformance, Southern Company leaves rival PG&E Corporation (PCG) in the dust. Shares of PG&E Corporation have lost 1.4% on a YTD basis and gained just 2.2% over the past 52 weeks – trailing not just SO but the entire utilities sector.
Despite the stock’s impressive price action, analysts remain cautiously optimistic about its prospects. Among the 20 analysts covering the stock, there is a consensus rating of “Moderate Buy,” and the stock currently trades above the mean price target of $76.53.
On the date of publication, Sristi Jayaswal 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.
