Southern Company’s (SO Quick QuoteSO - Free Report) shares gained roughly 10.1% year to date (“YTD”), outperforming TransAlta Corporation (TAC Quick QuoteTAC - Free Report) , which advanced about 1.3%, and Centuri Holdings’ (CTRI Quick QuoteCTRI - Free Report) solid 6.1% rise. The stock, however, lagged the Electric Power utility sub-industry, which delivered a strong 26.9% return, and the broader utility sector’s growth of nearly 22.7% over the same period.  Meanwhile, MGE Energy, Inc. (MGEE Quick QuoteMGEE - Free Report) delivered the weakest performance, declining around 12.3%. With such mixed relative performance, many investors are now left wondering — is Southern Company gearing up for its next leg higher, or should they wait for a more attractive entry point?

Year-to-Date Performance Snapshot

Image Source: Zacks Investment Research

SO’s Legacy of Growth and Stability

Established in 1945 and headquartered in Atlanta, Southern Company has grown into one of the most influential names in the U.S. regulated utility landscape. The company now delivers electricity and natural gas to nearly 9 million customers through seven operating companies. Its energy network is extensive, supported by roughly 46 gigawatts of generating capacity, approximately 200,000 miles of electric transmission and distribution lines, and more than 80,000 miles of natural gas pipelines.

Southern Company has evolved far beyond a conventional electric utility. Its asset base spans coal, natural gas, nuclear facilities and hydroelectric units, along with an expanding mix of renewable and storage solutions. The acquisition of AGL Resources in 2016 significantly broadened the natural gas footprint, wholesale operations and long-term strategic positioning, reinforcing its role as a diversified energy platform with meaningful scale.

With shares delivering gains so far this year, a key question now surfaces for investors — does the current momentum still offer an attractive entry point, or is patience the smarter move?

SO Stock’s Earnings Estimates

Image Source: Zacks Investment Research

Over the past 60 days, the Zacks Consensus Estimate for SO’s earnings per share has been revised upward by 7.02% for the first quarter and 0.81% for the second quarter, while estimates for both the current fiscal year (F1) and the next fiscal year (F2) remained unchanged, indicating only modest positive revisions despite the stock’s steady performance.

Why Southern Company Looks Well-Positioned

Exceptional Load Growth and Economic Development: Southern Company is seeing unprecedented electricity demand, especially from data centers and industrial customers. Weather-normalized retail sales increased 2.6% in the third quarter of 2025, supported by a 17% year-over-year rise in data center usage. This scale of demand acceleration stands out even when compared with peers such as TransAlta Corporation, Centuri Holdings and MGE Energy, which also benefit from regulated and stable service territories but do not currently match Southern Company’s pipeline intensity and expected annual sales growth of around 8% through 2029.

Strong and Demonstrated Execution on Large-Load Contracts: The company continues to successfully convert its large-load development pipeline into long-term contractual agreements. Southern Company secured 2 gigawatts of new signed contracts in the latest quarter, increasing its contracted base to 8 gigawatts. Compared with TransAlta Corporation, which is expanding its renewable portfolio, Centuri Holdings, which focuses heavily on utility infrastructure services, and MGE Energy, known for balanced clean-energy execution, Southern Company’s minimum-bill and cost-recovery contract structure provides stronger downside protection and enhances earnings visibility.

Significant and Predominantly Regulated Capital Investment Opportunity: Southern Company has a clear visibility on a massive $76 billion, five-year capital plan, with 95% of the spending allocated to low-risk, state-regulated utilities. Furthermore, there is an identified potential for an additional $5 billion in regulated capital opportunities, primarily in Georgia. This heavily regulated focus provides predictable cash flows and reduces business volatility, making earnings more stable and dependable for investors.

Long and Consistent Dividend Growth Track Record: Southern Company offers an attractive and reliable income stream, highlighted by its 24 consecutive years of dividend increases and a 78-year history of not reducing the dividend. This long-term commitment to returning capital to shareholders is a cornerstone of its value proposition, appealing to income-focused investors and signaling strong financial health and management confidence in future cash flows.

Strategic Investment in Grid Modernization and Diverse Energy Resources: The company is not just building for demand but is also modernizing its grid with a balanced and forward-looking resource plan. For example, Georgia Power's 10-gigawatt request includes a significant portion of battery energy storage systems and renewables alongside highly efficient natural gas generation. This diversified approach enhances grid reliability, positions the company for a lower-carbon future and mitigates over-reliance on a single fuel source.

While SO benefits from exceptional load growth, a strong pipeline of long-term contracts and a solid capital investment plan, investors should be mindful of certain risks.

What Could Derail the Growth Narrative

Significant and Ongoing Exposure to Regulatory and Construction Risks: Southern Company's growth is contingent on timely and favorable regulatory approvals for massive projects, such as the 10 gigawatts of new resources in Georgia. Any delays, cost disallowances or unfavorable terms from public service commissions could negatively impact projected returns and profitability. The complexity and scale of these infrastructure projects inherently carry the risk of schedule and budget overruns, as historically seen with projects like Plant Vogtle.

High P/E Ratio Signals Potential Overvaluation: Another key concern for SO is its high P/E ratio of 19.66, which stands above the sector average of 16.19. This suggests that investors may be pricing in more growth than what the company could realistically deliver. As a result, investors may want to exercise caution before taking new positions, as the stock appears slightly stretched on valuation.

Persistent Pressure From Rising Interest Expenses: The company continues to face elevated borrowing costs, with more than $27 billion in maturities scheduled between 2025 and 2027. High interest burdens could dilute earnings momentum. Comparatively, TransAlta Corporation recently focused on capital-structure optimization, while Centuri Holdings typically relies on contracted utility-service cash flows for stability, leaving Southern Company comparatively more sensitive to rates.

Competitive Threats From Alternative Energy and Market Dynamics: The company acknowledges competition from the development of alternative energy sources. The rise of decentralized generation, like rooftop solar, and the potential for corporate power purchase agreements directly with independent developers could erode the traditional utility business model over the long term. Southern Company must continuously adapt to these evolving market dynamics to retain its customer base.

Vulnerability to Macroeconomic Downturns and Demand Shocks: Southern Company’s load-growth outlook depends heavily on continued data-center and industrial build-outs in the Southeast. Any recessionary shock or technology-sector slowdown could halt expansion plans. This risk profile differs from Centuri Holdings, which enjoys contracted utility-service demand, and MGE Energy, which operates in a slower-growth but highly stable regional market.