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Southern Co. (SO) Down 0.1% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Southern Co. (SO - Free Report) . Shares have lost about 0.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Southern Co. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Southern Company Q3 Earnings Beat on Higher Retail Sales

Southern Company reported third-quarter 2018 earnings per share (excluding certain one-time items) of $1.14, above the Zacks Consensus Estimate of $1.07 and the year-ago profit of $1.12.

The outperformance stemmed from favorable regulatory results and strength of its retail unit. These positives were partly offset by decrease in revenue from the wholesale segment.

The Atlanta-based utility’s quarterly revenue – at $6.2 billion – came marginally lower than the third-quarter 2017 sales but beat the Zacks Consensus Estimate of $6 billion.

Overall Sales Breakup

While Southern Company’s wholesale power sales decreased 3.8%, this was more than offset by the strength in retail electricity demand amid favorable weather conditions and constructive regulatory results.

Consequently, there was an upward movement in overall electricity sales and usage. In fact, total electricity sales during the third quarter was up 2.1% from the same period last year.

Southern Company’s total retail sales improved 3.9%, with residential, industrial and commercial sales going up by 6.2%, 2.4% and 3.2%, respectively.

Expenses Summary

The power supplier’s operations and maintenance cost increased 4.7% to $1.4 billion but the utility’s total operating expense for the period – at $4 billion – was down 5.3% from the prior-year level.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -16.4% due to these changes.

VGM Scores

Currently, Southern Co. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Southern Co. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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