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Southern Company

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SO is one of the largest and best-managed electric utility holding companies in the U.S. with good rate base growth and constructive regulation. We expect it to generate steady earnings and dividend growth in the coming years through its long-term power contracts. Additionally, the utility's $12 billion AGL Resources has significantly increased its customer base and diversified its offerings. Further, the company’s Vogtle Project also received approval from Georgia PSC. However, the decision to continue with the project may increase the credit risk of the company. As it is , the cost overrun issues over its Vogtle and Kemper projects continue to weigh on SO’s already weak financials. High leverage of over 60% poses major roadblock in the growth of the company. Thus we take a cautious stance on the prospects of the stock.


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