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Southern (SO) Q3 Earnings Beat as Weather Favors, Costs Decline
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Power supplier The Southern Company (SO - Free Report) reported third-quarter 2023 earnings per share (excluding certain one-time items) of $1.42, ahead of the Zacks Consensus Estimate of $1.32 and year-ago adjusted profit of $1.31. The outperformance reflects lower-than-expected operating expenses, to go with the positive effects of weather, rates, usage and pricing changes.
Meanwhile, the utility reported revenues of $7 billion. The top line missed the Zacks Consensus Estimate of $8.4 billion and came in 16.7% lower than third-quarter 2022 sales, primarily due to a drop in industrial sales.
The firm guided earnings per share of $3.55-$3.65 for this year.
Southern Company (The) Price, Consensus and EPS Surprise
While Unit 3 of the Vogtle nuclear project started commercial operation on Jul 31, per the latest earnings presentation, Southern Company expects Unit 4 to be up and running during the first quarter of 2024. The utility said that fuel loading was completed in August, with reactor coolant pump replacement underway. At the same time, Southern Company kept the share of its Georgia Power subsidiary in capital costs for the units unchanged.
Overall Sales Breakup
Southern Company’s wholesale power sales were down 13.6%, which was somewhat compensated by a rise in retail electricity demand.
Overall, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the third quarter declined 2.1% from the same period last year.
Southern Company’s total retail sales moved up 2.1%, with residential and commercial sales increasing 4.6% and 3.7%, respectively. This was partly offset by the 2.3% decline in industrial sales.
Expenses Summary
The power supplier’s operations and maintenance cost fell 6.7% year over year to $1.4 billion, while the utility’s total operating expense for the period — at $4.9 billion — was down 21.3% from the prior-year level and came below our estimate of $5.8 billion.
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 NiSource Inc. (NI - Free Report) , Consolidated Edison (ED - Free Report) and New Jersey Resources (NJR - Free Report) . Each of the firms carries a Zacks Rank #2 (Buy).
NiSource: NiSource is valued at around $10.3 billion. For 2023, NI has a projected earnings growth rate of 8.2%.
NiSource’s expected EPS growth rate for three to five years is currently 7.2%, which compares favorably with the industry's growth rate of 6.3%. Headquartered in Merrillville, IN, NI shares have lost 3% in a year.
Consolidated Edison: Consolidated Edison is valued at around $30.9 billion. For 2023, ED has a projected earnings growth rate of 7.9%.
Consolidated Edison delivered a four-quarter average earnings surprise of 6.1%. Headquartered in New York, ED shares have edged up 0.1% in a year.
New Jersey Resources: New Jersey Resources is valued at around $4 billion. For 2023, NJR has a projected earnings growth rate of 7.6%.
New Jersey Resources delivered a four-quarter average earnings surprise of 120.8%. Headquartered in Wall, NJ, NJR shares have lost 7.7% in a year.
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Southern (SO) Q3 Earnings Beat as Weather Favors, Costs Decline
Power supplier The Southern Company (SO - Free Report) reported third-quarter 2023 earnings per share (excluding certain one-time items) of $1.42, ahead of the Zacks Consensus Estimate of $1.32 and year-ago adjusted profit of $1.31. The outperformance reflects lower-than-expected operating expenses, to go with the positive effects of weather, rates, usage and pricing changes.
Meanwhile, the utility reported revenues of $7 billion. The top line missed the Zacks Consensus Estimate of $8.4 billion and came in 16.7% lower than third-quarter 2022 sales, primarily due to a drop in industrial sales.
The firm guided earnings per share of $3.55-$3.65 for this year.
Southern Company (The) Price, Consensus and EPS Surprise
Southern Company (The) price-consensus-eps-surprise-chart | Southern Company (The) Quote
Vogtle Updates
While Unit 3 of the Vogtle nuclear project started commercial operation on Jul 31, per the latest earnings presentation, Southern Company expects Unit 4 to be up and running during the first quarter of 2024. The utility said that fuel loading was completed in August, with reactor coolant pump replacement underway. At the same time, Southern Company kept the share of its Georgia Power subsidiary in capital costs for the units unchanged.
Overall Sales Breakup
Southern Company’s wholesale power sales were down 13.6%, which was somewhat compensated by a rise in retail electricity demand.
Overall, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the third quarter declined 2.1% from the same period last year.
Southern Company’s total retail sales moved up 2.1%, with residential and commercial sales increasing 4.6% and 3.7%, respectively. This was partly offset by the 2.3% decline in industrial sales.
Expenses Summary
The power supplier’s operations and maintenance cost fell 6.7% year over year to $1.4 billion, while the utility’s total operating expense for the period — at $4.9 billion — was down 21.3% from the prior-year level and came below our estimate of $5.8 billion.
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 NiSource Inc. (NI - Free Report) , Consolidated Edison (ED - Free Report) and New Jersey Resources (NJR - Free Report) . Each of the firms carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NiSource: NiSource is valued at around $10.3 billion. For 2023, NI has a projected earnings growth rate of 8.2%.
NiSource’s expected EPS growth rate for three to five years is currently 7.2%, which compares favorably with the industry's growth rate of 6.3%. Headquartered in Merrillville, IN, NI shares have lost 3% in a year.
Consolidated Edison: Consolidated Edison is valued at around $30.9 billion. For 2023, ED has a projected earnings growth rate of 7.9%.
Consolidated Edison delivered a four-quarter average earnings surprise of 6.1%. Headquartered in New York, ED shares have edged up 0.1% in a year.
New Jersey Resources: New Jersey Resources is valued at around $4 billion. For 2023, NJR has a projected earnings growth rate of 7.6%.
New Jersey Resources delivered a four-quarter average earnings surprise of 120.8%. Headquartered in Wall, NJ, NJR shares have lost 7.7% in a year.