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Southern Company (SO) Q4 Earnings on Deck: What to Expect
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The Southern Company (SO - Free Report) is set to release fourth-quarter results on Feb 16. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 24 cents per share on revenues of $6.1 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the December quarter. But it’s worth taking a look at Southern Company’s previous-quarter results first.
Highlights of Q3 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider missed the consensus mark due to a spike in operations and maintenance costs. Southern Company had reported adjusted earnings per share of $1.31, lagging the Zacks Consensus Estimate of $1.33. However, revenues of $8.4 billion came in 24.1% above the consensus mark, backed by the positive effects of rates, usage and pricing changes, and a demand boost from favorable weather.
SO topped the Zacks Consensus Estimate for earnings in three of the last four quarters. The utility has a trailing four-quarter earnings surprise of 8.8%, on average. This is depicted in the graph below:
The Zacks Consensus Estimate for the fourth-quarter bottom line has remained the same in the last seven days. The estimated figure indicates a 33.3% decrease year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 5.7% improvement from the year-ago period.
Factors to Consider
Southern Company's seven major regulated utilities serve approximately nine million electric and natural gas customers. Leveraging the demographics of its operating territories, the firm has been successfully expanding its regulated business customer base. As proof of that effort, Southern Company added nearly 11,000 new residential electric customers and more than 8,000 residential natural gas customers in the third quarter. This trend most likely continued in the October-December period of 2022 because of healthy economic development across its service territories.
In particular, the firm is expected to have benefited from higher retail electricity sales, reflecting economic recovery in the Southeast in the form of demand from industrial buyers. Finally, investment in state-regulated electric/gas franchises and continued trends in hybrid working have most likely buoyed Southern Company’s revenues and cash flows.
On a somewhat bearish note, the power supplier’s total operating cost in the third quarter increased 37% year over year to $6.2 billion. The upward cost trajectory is likely to have continued in the second quarter due to inflationary pressures.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Southern Company is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is 0.55%.
Zacks Rank: Southern Company currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Southern Company, here are some firms from the utilities space that you may want to consider on the basis of our model:
NiSource Inc. (NI - Free Report) has an Earnings ESP of +1.03% and a Zacks Rank #2. The firm is scheduled to release earnings on Feb 22.
For 2023, NiSource Works has a projected earnings growth rate of 6.4%. Valued at around $10.9 billion, NI has lost 4.5% in a year.
Public Service Enterprise Group Incorporated (PEG - Free Report) has an Earnings ESP of +2.38% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 21.
Public Service Enterprise topped the Zacks Consensus Estimate by an average of 5.5% in the trailing four quarters, including a 2.4% beat in Q3. PEG has lost 5.4% in a year.
American Water Works Company, Inc. (AWK - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 15.
For 2023, American Water Works has a projected earnings growth rate of 7%. Valued at around $27.4 billion, MUSA has gained 2.5% in a year.
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Southern Company (SO) Q4 Earnings on Deck: What to Expect
The Southern Company (SO - Free Report) is set to release fourth-quarter results on Feb 16. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 24 cents per share on revenues of $6.1 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the December quarter. But it’s worth taking a look at Southern Company’s previous-quarter results first.
Highlights of Q3 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider missed the consensus mark due to a spike in operations and maintenance costs. Southern Company had reported adjusted earnings per share of $1.31, lagging the Zacks Consensus Estimate of $1.33. However, revenues of $8.4 billion came in 24.1% above the consensus mark, backed by the positive effects of rates, usage and pricing changes, and a demand boost from favorable weather.
SO topped the Zacks Consensus Estimate for earnings in three of the last four quarters. The utility has a trailing four-quarter earnings surprise of 8.8%, on average. This is depicted in the graph below:
Southern Company (The) Price and EPS Surprise
Southern Company (The) price-eps-surprise | Southern Company (The) Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the fourth-quarter bottom line has remained the same in the last seven days. The estimated figure indicates a 33.3% decrease year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 5.7% improvement from the year-ago period.
Factors to Consider
Southern Company's seven major regulated utilities serve approximately nine million electric and natural gas customers. Leveraging the demographics of its operating territories, the firm has been successfully expanding its regulated business customer base. As proof of that effort, Southern Company added nearly 11,000 new residential electric customers and more than 8,000 residential natural gas customers in the third quarter. This trend most likely continued in the October-December period of 2022 because of healthy economic development across its service territories.
In particular, the firm is expected to have benefited from higher retail electricity sales, reflecting economic recovery in the Southeast in the form of demand from industrial buyers. Finally, investment in state-regulated electric/gas franchises and continued trends in hybrid working have most likely buoyed Southern Company’s revenues and cash flows.
On a somewhat bearish note, the power supplier’s total operating cost in the third quarter increased 37% year over year to $6.2 billion. The upward cost trajectory is likely to have continued in the second quarter due to inflationary pressures.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Southern Company is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is 0.55%.
Zacks Rank: Southern Company currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Southern Company, here are some firms from the utilities space that you may want to consider on the basis of our model:
NiSource Inc. (NI - Free Report) has an Earnings ESP of +1.03% and a Zacks Rank #2. The firm is scheduled to release earnings on Feb 22.
For 2023, NiSource Works has a projected earnings growth rate of 6.4%. Valued at around $10.9 billion, NI has lost 4.5% in a year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Public Service Enterprise Group Incorporated (PEG - Free Report) has an Earnings ESP of +2.38% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 21.
Public Service Enterprise topped the Zacks Consensus Estimate by an average of 5.5% in the trailing four quarters, including a 2.4% beat in Q3. PEG has lost 5.4% in a year.
American Water Works Company, Inc. (AWK - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 15.
For 2023, American Water Works has a projected earnings growth rate of 7%. Valued at around $27.4 billion, MUSA has gained 2.5% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.