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The Southern Company (SO), headquartered in Atlanta, Georgia, is one of the largest utilities in the U.S. Valued at $85.11 billion by market cap, the company deals with the generation, transmission, and distribution of electricity. SO and its subsidiaries own or operate 55 facilities operating or under development in 15 states, with more than 12,840 MW of generating capacity in Alabama, California, Delaware, Georgia, Kansas, Maine, Nevada, New Mexico, North Carolina, Oklahoma, South Dakota, Texas, Washington, West Virginia, and Wyoming.
Shares of this leading U.S. wholesale energy provider have underperformed the broader market over the past year. SO has gained 9.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 28.9%. In 2024 alone, SO stock is up 10.9%, while the SPX is up 11.2% on a YTD basis.
Zooming in further, SO has marginally outperformed compared to the S&P 500 Utilities Sector SPDR (XLU). The exchange-traded fund has gained about 9.2% over the past year. However, the ETF’s 12.9% gains on a YTD basis outshine the stock’s gains over the same time frame.
On May 6, SO shares fell more than 1% after the company announced that it would offer $1.1 billion of convertible senior notes due June 2027. On May 2, SO reported its Q1 results, with its revenue coming in at $6.65 billion. The company’s net income stood at $1.13 billion, and its EPS came in at $1.03, higher than Wall Street estimates of $0.90.
For the current fiscal year, ending in December, analysts expect SO’s EPS to grow 9.3% to $3.99 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 20 analysts covering SO stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, one “Moderate Buy,” eight “Holds,” and one “Strong Sell.”
This configuration has been consistent over the past three months.
Recently, Argus Research maintained a “Buy” rating on SO stock and raised the price target from $75 to $90, implying a potential upside of 15.8% from current levels.
The mean price target of $75.11 represents a 3.4% downside from SO’s current price levels. The Street-high price target of $85 suggests an upside potential of 9.3%.
On the date of publication, Dipanjan Banchur 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.
