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Southern (SO) Beats on Q4 Earnings, Extends Vogtle Timeline

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Power supplier The Southern Company (SO - Free Report) reported fourth-quarter 2021 earnings per share (excluding certain one-time items) of 36 cents, a penny ahead of the Zacks Consensus Estimate. The outperformance primarily stemmed from the positive effects of rates, usage and pricing changes.

However, the bottom line compared unfavorably with the year-ago quarter’s adjusted profit of 47 cents due to uptick in operations and maintenance costs.

The utility reported revenues of $5.8 billion, which beat the Zacks Consensus Estimate of $5.4 billion and were 12.7% higher than the fourth-quarter 2020 figure.

The firm guided earnings per share of $3.50-$3.60 for this year and 90 cents for the March quarter. Further, Southern Company management stuck to its long-term EPS growth rate projection of 5-7% based on 2024 adjusted EPS of $4-$4.30.
 

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 expects further delays of three to six months to complete the Units 3 and 4 of the Vogtle nuclear project. The utility’s revised in-service dates for the facilities are now Q4’22-Q1’23 (unit 3) and Q3’23-Q4’23 (unit 4). At the same time, Southern Company increased the share of its Georgia Power subsidiary in capital costs for the units by $920 million.

Overall Sales Breakup

Southern Company’s wholesale power sales rose 14.7%, partly offset by a fall in retail electricity demand.

Overall, there was an upward movement in overall electricity sales and usage. In fact, total electricity sales during the fourth quarter were up 3.3% from the same period last year.

Southern Company’s total retail sales edged down 0.6%, with residential sales decreasing 5%. However, industrial and commercial sales rose 1.1% and 2%, respectively.

Expenses Summary

The power supplier’s operations and maintenance cost rose 12.6% year over year to $1.8 billion, while the utility’s total operating expense for the period — at $6.1 billion — was up 39% from the prior-year level.

Zacks Rank & Stock Picks

Southern Company carries a Zacks Rank #3 (Hold).

Meanwhile, investors interested in the utility space could look at better options like Entergy Corporation (ETR - Free Report) , NiSource Inc. (NI - Free Report) and Atmos Energy Corporation (ATO - Free Report) . All the firms carry a Zacks Rank #2 (Buy).

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

Entergy is valued at around $21 billion. For 2022, NI has a projected earnings growth rate of 5.9%.

Entergy delivered a four-quarter average earnings surprise of 5.3%. Headquartered in New Orleans, LA, ETR shares have gained around 15.8% in a year.

NiSource is valued at around $11.2 billion. For 2022, ETR has a projected earnings growth rate of 6.9%.

NiSource delivered a four-quarter average earnings surprise of 2.8%. Headquartered in Merrillville, IN, NI shares have gained around 29.6% in a year.

Atmos Energy’s expected EPS growth rate for three to five years is currently 7.3%, which compares favorably with the industry's growth rate of 6.1%. For fiscal 2022, ATO has a projected earnings growth rate of 7.8%.

Atmos Energy delivered a four-quarter average earnings surprise of 4.4%. Headquartered in Dallas, TX, ATO shares have gained around 17.9% in a year.