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Southern Company (SO) Up 2.3% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Southern Company (SO - Free Report) . Shares have added about 2.3% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

First Quarter 2017 Results

Southern Company reported first-quarter 2017 earnings per share (excluding certain one-time items) of $0.66, beating the Zacks Consensus Estimate of $0.58 and the year-ago adjusted profit of $0.58. Increase in revenues improved earnings.

The Atlanta-based utility’s quarterly revenues  of $5,771 million was  45.5% higher than the first-quarter 2016 level of $3,965 million and also ahead of the Zacks Consensus Estimate of $5,144 million, driven by robust performance by its wholesale unit.

Sales Report

While wholesale revenues jumped 37%, Southern Company’s total retail sales declined 6.7%, residential and commercial sales were down by 13.4% and 4.5%, respectively. Demand from industrial customers also fell 2.2% from the year-ago period.

Total electricity sales during the first quarter were up 0.5% from the same period last year.

Expenses Break Up

Southern Company’s operations and maintenance cost increased 20% to $1,329 million, while the utility’s total operating expense for the period was $4,465 million, up 46.3% from the prior-year level.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Southern Company Price and Consensus

VGM Scores

At this time, Southern Company's stock has an average Growth Score of 'C', however its Momentum is doing a lot better with an 'A'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.

Outlook

The stock has a Zacks Rank #4 (Sell). We expect below average returns from the stock in the next few months.


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