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Can Southern (SO) Q4 Earnings Maintain Its Beat Streak?
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The Southern Company (SO - Free Report) is set to release fourth-quarter results on Feb 15. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 59 cents per share on revenues of $7.7 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the December quarter. But it’s worth taking a look at Southern Company’s previous-quarter results first.
Highlights of Q3 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark on lower-than-expected operating expenses, to go with the positive effects of weather, rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of $1.42, ahead of the Zacks Consensus Estimate of $1.32. However, revenues of $7 billion came in 16.7% below the consensus mark, affected by a drop in industrial sales.
SO topped the Zacks Consensus Estimate for earnings in each of the last four quarters. The utility has a trailing four-quarter earnings surprise of 8.5%, on average. This is depicted in the graph below:
The Zacks Consensus Estimate for the fourth-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 126.9% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9.8% 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 added more than 35,000 new residential electric customers and in excess of 19,000 residential natural gas customers in the first three quarters of 2023. This trend most likely continued in the October-December period of 2023 because of healthy economic development across its service territories.
On a further bullish note, the power supplier’s operations and maintenance cost in the fourth quarter might have come down due to prudent management. This, in turn, is likely to have buoyed overall earnings. In particular, our estimate for operations and maintenance outgo is pegged at $1.5 billion, indicating a 25.9% drop from $2 billion reported in the year-ago quarter.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for Southern Company this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
SO has an Earnings ESP of +2.95% and a Zacks Rank #2.
Other Stocks to Consider
Southern Company is not the only company in the utilities space looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
Sempra Energy (SRE - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #2. The firm is scheduled to release earnings on Feb 27.
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Can Southern (SO) Q4 Earnings Maintain Its Beat Streak?
The Southern Company (SO - Free Report) is set to release fourth-quarter results on Feb 15. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 59 cents per share on revenues of $7.7 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the December quarter. But it’s worth taking a look at Southern Company’s previous-quarter results first.
Highlights of Q3 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark on lower-than-expected operating expenses, to go with the positive effects of weather, rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of $1.42, ahead of the Zacks Consensus Estimate of $1.32. However, revenues of $7 billion came in 16.7% below the consensus mark, affected by a drop in industrial sales.
SO topped the Zacks Consensus Estimate for earnings in each of the last four quarters. The utility has a trailing four-quarter earnings surprise of 8.5%, on average. This is depicted in the graph 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 fourth-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 126.9% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9.8% 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 added more than 35,000 new residential electric customers and in excess of 19,000 residential natural gas customers in the first three quarters of 2023. This trend most likely continued in the October-December period of 2023 because of healthy economic development across its service territories.
On a further bullish note, the power supplier’s operations and maintenance cost in the fourth quarter might have come down due to prudent management. This, in turn, is likely to have buoyed overall earnings. In particular, our estimate for operations and maintenance outgo is pegged at $1.5 billion, indicating a 25.9% drop from $2 billion reported in the year-ago quarter.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for Southern Company this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
SO has an Earnings ESP of +2.95% and a Zacks Rank #2.
Other Stocks to Consider
Southern Company is not the only company in the utilities space looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
Sempra Energy (SRE - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #2. The firm is scheduled to release earnings on Feb 27.
You can see the complete list of today’s Zacks #1 Rank stocks here.
For 2024, Sempra Energy has a projected earnings growth rate of 5.5%. Valued at around $44.1 billion, SRE has lost 11.1% in a year.
Dominion Energy (D - Free Report) has an Earnings ESP of +0.63% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 22.
For 2024, Dominion Energy has a projected earnings growth rate of 20.2%. Valued at around $37.2 billion, D has lost 25.8% in a year.
Ameren Corporation (AEE - Free Report) has an Earnings ESP of +0.33% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 22.
For 2024, Ameren Corporation has a projected earnings growth rate of 4.8%. Valued at around $18.1 billion, AEE has lost 20.6% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.