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Southern Company (SO) Q3 Earnings Miss, Keeps Vogtle Timeline

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Power supplier Southern Company (SO - Free Report) reported third-quarter 2020 earnings per share (excluding certain one-time items) of $1.22, narrowly missing the Zacks Consensus Estimate of $1.24 and decreasing from the year-ago adjusted profit of $1.34. The underperformance primarily stemmed from lower electricity demand as the novel coronavirus outbreak reduced industrial and commercial usage.

Meanwhile, the utility reported revenues of $5.6 billion, which missed the Zacks Consensus Estimate of $5.9 billion and was 6.3% lower than third-quarter 2019 sales.

The company, which expects to hit the upper-end of its 2020 EPS guidance range of $3.10-$3.22, further updated that the consequence of the ongoing coronavirus epidemic on its retail sales has been lower than expected. Southern Company sees the pandemic’s impact on this year’s base revenues of around $300 million that can be offset through cost containment measures.

 

Southern Company The Price, Consensus and EPS Surprise

Southern Company The Price, Consensus and EPS Surprise

Southern Company The price-consensus-eps-surprise-chart | Southern Company The Quote

 

Vogtle Updates

Per Southern Company’s latest earnings presentation, it continues to progress toward completing the Units 3 and 4 of the Vogtle nuclear project by the November 2021 and November 2022 regulatory approved in-service dates.

Overall Sales Breakup

Southern Company’s wholesale power sales decreased 5.4%. There was also a steep fall in retail electricity demand.

Consequently, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the third quarter were down 6.4% from the same period last year.

Southern Company’s total retail sales were down 6.7%, with residential and commercial sales going down by 4.1% and 8.8%, respectively. Moreover, industrial sales declined 7.3%.

Expenses Summary

The power supplier’s operations and maintenance cost remained essentially unchanged at $1.3 billion but the utility’s total operating expense for the period — at $3.8 billion — fell 4.9% from the prior-year level.

Zacks Rank & Stock Picks

Southern Company — one of the largest generators of electricity in the nation along with the likes of Exelon Corporation (EXC - Free Report) and Duke Energy Corporation (DUK - Free Report) — carries a Zacks Rank #3 (Hold).

Meanwhile, investors interested in the utility space could look at a better option like Portland General Electric Company (POR - Free Report) that carries a Zacks Rank #2 (Buy). The firm beat the Zacks Consensus Estimate in three of the last four quarters and met in the other, delivering an earnings surprise of 7.74%, on average.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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