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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: Robust Growth and Investment Plans Unveiled

Southern Company's 2025 adjusted earnings per share (EPS) reached $4.30, at the top of their guidance range, representing 6% growth from the prior year and 9% average annual growth from 2023. The company's weather-normalized total retail electricity sales growth was 1.7% in 2025, more than double the cumulative growth of the last decade. Notably, Georgia Power's sales grew 2.5%, driven by strong commercial sales, particularly from data center customers, which were up 17% year-over-year. The actual EPS for the quarter came out at $0.55, slightly below estimates of $0.558.

Publication Date: Feb -22

📋 Highlights
  • 2025 Adjusted EPS Growth:: Reached $4.30, top of guidance, 6% YoY growth and 9% CAGR since 2023.
  • Retail Electricity Sales Growth:: Weather-normalized sales up 1.7% in 2025 (double decade’s average), Georgia Power’s commercial sales rose 17% YoY due to data centers.
  • Capital Investment Expansion:: $81 billion 5-year plan (30% higher than prior forecast), $42 billion allocated for generation, transmission, and pipeline upgrades.
  • Projected Earnings Growth:: 8-9% CAGR in 2026–2028 (guidance: $4.85–$5.45 by 2028), 8% average annual growth from 2026–2030.
  • Data Center Demand Impact:: 13 GW of Georgia contracts secured, potential recontracting at $20–25/kW-month, driving rate stability through 2027–2028.

Financial Performance and Guidance

The company's financial performance was strong, with adjusted EPS growth driven by increasing demand, particularly from data center customers. For 2026, the guidance range is $4.50 to $4.60 per share, representing 7% growth from the top and bottom of the 2025 adjusted EPS guidance range. Analysts estimate next year's revenue growth at 4.8%. The company's long-term growth prospects are supported by its robust capital investment plan, with a base capital investment forecast of $81 billion over the next 5 years.

Capital Investment and Growth Prospects

Southern Company's capital investment plan is expected to drive long-term growth, with a focus on new generation, enhancements to existing generation assets, and expansions of their transmission and interstate pipeline systems. The company has a robust pipeline of large load customers, with over 75 gigawatts of potential load, and 26 signed contracts representing 10 gigawatts of fully contracted electric service agreements. The company projects retail electric sales to grow at least 3% in 2026 and 10% on average from 2026 through 2030.

Valuation and Dividend Yield

With a P/E Ratio of 23.96 and a Dividend Yield of 3.14%, Southern Company's valuation appears reasonable, considering its growth prospects. The company's ROE is 12.5%, and its ROIC is 4.55%. The Net Debt / EBITDA ratio is 4.83, indicating a manageable debt burden. As the company continues to invest in its capital investment plan, its growth prospects are expected to drive long-term shareholder value.

Growth Drivers and Risks

The growth in data centers is a key driver of Southern Company's growth prospects, with a growing pipeline of projects and a strong outlook for the future. However, the company notes that there may be a pivot in the near term, with possible deferrals of initial energization dates or restructuring of ramp profiles. Minimum bill protections in contracts may insulate earnings from fluctuations. The company's disciplined risk profile and focus on rate stability are expected to support its long-term growth prospects.

3. NewsRoom

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AH Realty Trust Executes 4,000-Square-Foot Lease at Southern Post With Atlanta Golf & Social

Mar -11

Source: globenewswire.com

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Digital Realty Enters Portugal, Boosts Southern Europe Data Hub

Mar -05

Source: zacks.com

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Helio Corporation Concludes Southern U.S. Investor Roadshow and Announces Upcoming Florida Investor Meetings and NIBA Conference Participation

Mar -05

Source: newsfilecorp.com

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Mississippi Power names Meridian native Fredie Carmichael vice president of Customer Solutions and Corporate Communications

Mar -04

Source: prnewswire.com

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Digital Realty Enters Portugal, Strengthening Southern Europe's Digital Backbone

Mar -04

Source: globenewswire.com

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111 Capital Makes New Investment in Southern Company (The) $SO

Mar -02

Source: defenseworld.net

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APG Asset Management N.V. Trims Position in Southern Company (The) $SO

Mar -01

Source: defenseworld.net

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Southern Cross Gold Consolidated Ltd. (SXGC) Opens the Market

Feb -27

Source: newsfilecorp.com

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

Stock-Card
Duke Energy

A-Score: 7.2/10

Value: 5.9

Growth: 4.7

Quality: 7.0

Yield: 8.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Southern

A-Score: 6.7/10

Value: 5.1

Growth: 4.8

Quality: 5.1

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
American Electric Power

A-Score: 6.6/10

Value: 4.4

Growth: 4.6

Quality: 4.7

Yield: 7.0

Momentum: 9.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
ConEd

A-Score: 6.6/10

Value: 5.3

Growth: 4.2

Quality: 4.9

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Edison

A-Score: 6.4/10

Value: 8.4

Growth: 5.3

Quality: 6.4

Yield: 9.0

Momentum: 1.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
PSEG

A-Score: 5.2/10

Value: 3.1

Growth: 3.8

Quality: 5.1

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

96.26$

Current Price

96.26$

Potential

-0.00%

Expected Cash-Flows