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What Lies Ahead for Southern Company (SO) in Q3 Earnings?
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The Southern Company (SO - Free Report) is set to release third-quarter results before the opening bell on Nov 4. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.22 per share on revenues of $5.9 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the September quarter. But it’s worth taking a look at Southern Company’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last-reported quarter, the Atlanta, GA-based service provider beat the consensus mark on a favorable weather impact as well as the positive effects of rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of 84 cents, surpassing the Zacks Consensus Estimate of 79 cents. The utility’s quarterly revenues of $5.2 billion also outperformed the Zacks Consensus Estimate by 4.1%.
Southern Company beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other, delivering an earnings surprise of 7.3%, on average. This is depicted in the chart below:
The Zacks Consensus Estimate for the third-quarter bottom line remained the same in the last seven days. The estimated figure indicates no change year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 5.2% increase 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 increased its customer count by 0.9% year over year for the 12-month period ending June 2021. This trend most likely continued in the third quarter of 2021 because of healthy population growth across its electric and gas franchises.
On a somewhat bearish note though, the power supplier’s total operating cost in the second quarter increased 26.1% year over year to $4.5 billion. The upward cost trajectory is likely to have continued in the third quarter due to escalation in the Vogtle nuclear project-related outlays, primarily stemming from quality/safety issues.
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 -0.82%.
Zacks Rank: Southern Company currently carries a Zacks Rank #4 (Sell).
While an earnings beat looks uncertain for Southern Company, here are some firms from the utility space that you may want to consider on the basis of our model:
The AES Corporation (AES - Free Report) has an Earnings ESP of +3.53% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 4.
Pinnacle West Capital Corp. (PNW - Free Report) has an Earnings ESP of +0.30% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Nov 5.
Atmos Energy Corporation (ATO - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 10.
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What Lies Ahead for Southern Company (SO) in Q3 Earnings?
The Southern Company (SO - Free Report) is set to release third-quarter results before the opening bell on Nov 4. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.22 per share on revenues of $5.9 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the September quarter. But it’s worth taking a look at Southern Company’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last-reported quarter, the Atlanta, GA-based service provider beat the consensus mark on a favorable weather impact as well as the positive effects of rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of 84 cents, surpassing the Zacks Consensus Estimate of 79 cents. The utility’s quarterly revenues of $5.2 billion also outperformed the Zacks Consensus Estimate by 4.1%.
Southern Company beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other, delivering an earnings surprise of 7.3%, on average. This is depicted in the chart 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 third-quarter bottom line remained the same in the last seven days. The estimated figure indicates no change year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 5.2% increase 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 increased its customer count by 0.9% year over year for the 12-month period ending June 2021. This trend most likely continued in the third quarter of 2021 because of healthy population growth across its electric and gas franchises.
On a somewhat bearish note though, the power supplier’s total operating cost in the second quarter increased 26.1% year over year to $4.5 billion. The upward cost trajectory is likely to have continued in the third quarter due to escalation in the Vogtle nuclear project-related outlays, primarily stemming from quality/safety issues.
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 -0.82%.
Zacks Rank: Southern Company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
While an earnings beat looks uncertain for Southern Company, here are some firms from the utility space that you may want to consider on the basis of our model:
The AES Corporation (AES - Free Report) has an Earnings ESP of +3.53% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 4.
Pinnacle West Capital Corp. (PNW - Free Report) has an Earnings ESP of +0.30% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Nov 5.
Atmos Energy Corporation (ATO - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 10.