Electric utility firm Southern Company ( SO - Analyst Report ) reported fourth quarter 2012 earnings per share of 44 cents, ahead of the Zacks Consensus Estimate of 39 cents and the year-ago period profit of 30 cents amid higher energy use and a drop in costs.

The Atlanta, Georgia-based power supplier’s quarterly revenue – at $3,703.0 million – came slightly higher than the fourth quarter 2011 level of $3,696.0 million but failed to match up to the Zacks Consensus Estimate of $4,465.0 million.

For its fiscal year ended Dec 31, 2012, Southern Company reported income (excluding the impact of an insurance claim) of $2.68 per share, above the Zacks Consensus Estimate of $2.62 and the 2011 earnings of $2.57 per share. However, revenues of $16,537.0 million were 6.3% below the year ago period and were also unable to beat the Zacks Consensus Estimate of $17,467.0 million.

Below-normal temperatures across Southern’s core Southeast market boosted electricity demand for heating. This brought about an upward movement in overall electricity sales and usage. Total electricity sales during the fourth quarter improved 2.4% from the same period last year.

Total retail sales rose by 2.6%, reflecting higher demand from residential customers, which increased by 6.6%. Commercial sales registered a year-over-year upward movement of 0.7%.

In particular, industrial sales were up 1.2%, lifting Southern’s fourth quarter results. With approximately a third of the company’s total retail sales coming from industrial customers, direction of the economy significantly affects the fortunes of Southern, as compared to other utilities that are less dependent on the industrial component.

Expenses Summary

The company’s operations and maintenance expense decreased 11.5% year over year, the second quarterly decline following two successive increases. Additionally, Southern’s total operating expense for the period, at $2,889.0 million, was approximately 7.0% lower than the prior-year level.

Outlook

Management indicated that it continues to see positive indications of economic growth in the Southeast region but admitted delayed decision making related to expansion and hiring on the back of uncertainty over longer-term fiscal issues.

Stocks to Consider

Southern Company currently retains a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.

However, there are certain other electric utility stocks like Ameren Corp. ( AEE - Analyst Report ) , Integrys Energy Group Inc. ( TEG - Analyst Report ) and Wisconsin Energy Corp. ( WEC - Analyst Report ) that offer tremendous value and are worth buying now. All these companies sport a Zacks Rank #1 (Strong Buy).