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SO Q3 Earnings Beat on Data Center Demand, Outlook Raised
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Key Takeaways
Southern Company's Q3 adjusted EPS rose 21.3% to $1.94, beating estimates, while revenues climbed 13%.
Data center electricity use surged 59%, as Southern's large-load contracts reached 21 GW across 33 projects.
Southern raised its 2026 adjusted EPS outlook to $4.70 and expanded investment plan to roughly $85 billion.
The Southern Company (SO - Free Report) posted third-quarter 2026 adjusted earnings of $1.94 per share, up 21.3% from $1.60 a year earlier. The result surpassed the Zacks Consensus Estimate of $1.71 by 13.45%, supported by warmer weather, stronger electricity sales, customer growth and improved Southern Power earnings.
Operating revenues rose 13% year over year to $8.84 billion, beating the $8.47 billion consensus by 4.35%. Data center electricity usage surged 59% from a year ago as large commercial customers increased demand.
Southern Company (The) Price, Consensus and EPS Surprise
Weather-normal retail electricity sales climbed 3.5% year over year in the quarter, exceeding the 2.7% gain for the first nine months. Commercial sales rose 7.3%, while industrial volumes advanced 1.8%, reflecting gains in metals, lumber and transportation-related activity.
Residential electricity sales increased 1.3% on a weather-adjusted basis. Southern added approximately 15,000 electric residential customers and nearly 6,000 residential gas customers during the quarter. Over the past year, Southern added about 45,000 residential electric customers.
Southern Revenue Mix Gets Lift From Retail Power
Retail electric fuel revenues grew $226 million year over year to $1.49 billion, while non-fuel retail electric revenues increased $690 million to $5.13 billion. Stronger demand, warmer weather and rate and pricing contributions from commercial and industrial customers supported the gains.
Wholesale electric revenues advanced $41 million to $873 million, and natural gas revenues rose $39 million to $773 million. Other electric revenues declined $33 million to $229 million. Other revenues increased $57 million to $345 million, mainly on distributed infrastructure activity at PowerSecure.
SO Sees Gains Across Its Electric Businesses
Georgia Power's operating revenues increased 18.6% to $4.47 billion, while Alabama Power's revenues rose 8.2% to $2.51 billion. Mississippi Power reported $497 million in revenues, up 3.5%, extending growth across the traditional electric operating companies.
Southern Power's revenues climbed 14.0% to $699 million, while its reported net income reached $52 million, compared with $3 million a year earlier. Southern Company Gas earned $21 million, down from $25 million, contrasting with stronger results at the electric businesses.
Southern Faces Higher Costs Despite Profit Growth
Total operating expenses increased $614 million to $5.84 billion. Fuel and purchased-power costs rose $223 million, while non-fuel operations and maintenance expenses increased $205 million. Taxes other than income taxes climbed $146 million, largely reflecting the timing of Georgia Power property taxes.
Despite higher expenses, operating income grew $406 million to $3.00 billion, widening the operating margin to 33.9% from 33.2%. Net income attributable to Southern reached $2.05 billion from $1.71 billion. Adjusted results excluded charges tied to wind repowering, debt extinguishment and Nicor Gas capital investments.
SO Expands Large-Load Deals and Customer Protections
Southern signed about 4 gigawatts of additional large-load contracts since its second-quarter call, lifting contracted demand to 21 gigawatts across 33 projects. Another 7 gigawatts was in late-stage or finalizing phases, while its prospective pipeline exceeded 75 gigawatts.
More than 16 gigawatts of contracted projects had begun construction. Newer agreements include minimum bills covering at least the full incremental cost to serve customers, termination protections and collateral requirements. Management expects this structure to protect existing customers while supporting the large-load buildout.
Southern Expands Capital and Financing Plans
Southern identified about $4 billion of projects beyond its $81 billion base capital plan through 2030, taking projected investment to roughly $85 billion. Opportunities include natural gas facility upgrades and the Southeast Connector pipeline expansion. Additional generation investments could eventually lift the five-year program toward $100 billion.
The company settled $1.2 billion of previously priced equity in the quarter, completing $5.3 billion of forward-priced issuances. It now projects approximately $2 billion in remaining equity needs through 2030 and targets a 17% funds-from-operations-to-debt ratio by 2029. Nine-month operating cash flow reached $7.88 billion, compared with $7.21 billion a year earlier. Property additions rose to $10.20 billion from $8.70 billion.
SO Raises Full-Year Earnings Projection
This Zacks Rank #3 (Hold) company increased its full-year 2026 adjusted earnings outlook to $4.70 per share, 10 cents above the high end of its original $4.50-$4.60 range. The new outlook implies 9% annual adjusted earnings growth. Adjusted earnings totaled $4.40 per share through September, compared with $3.76 a year earlier. Southern estimates fourth-quarter adjusted earnings at 30 cents per share.
Management plans to refresh its financial outlook through 2031 on its fourth-quarter earnings call in February 2027. Stronger customer demand and potential additional investment could support higher near-term earnings guidance ranges, alongside its existing credit and customer affordability priorities.
Some Key Utility Earnings
While we have discussed Southern’s third-quarter results in detail, let’s see how some other utilities have fared this earnings season.
American Water Works Company Inc. (AWK - Free Report) reported third-quarter 2026 adjusted earnings of $2.00 per share, which missed the Zacks Consensus Estimate of $2.11 by 5.21%. The bottom line increased 5.8% from $1.89 in the year-ago quarter. Earnings benefited from authorized rate increases and acquisitions, while higher operating costs weighed on profitability.
Revenues of $1.51 billion surpassed the Zacks Consensus Estimate of $1.47 billion by 2.57% and rose 4.1% year over year.
Cash and cash equivalents totaled $121 million as of Sept. 30, 2026, compared with $98 million at the end of 2025. Net cash provided by operating activities increased 17.1% to $1.64 billion during the first nine months from $1.40 billion in the prior-year period.
IDACORP, Inc. (IDA - Free Report) reported third-quarter 2026 earnings of $2.73 per share, which surpassed the Zacks Consensus Estimate of $2.51 by 8.8%. The bottom line also increased 20.8% from $2.26 in the year-ago quarter.
The year-over-year improvement was primarily driven by higher Idaho base rates, continued customer growth and increased revenues from large contract customers.
Total revenues in the third quarter of 2026 were $608 million, outpacing the Zacks Consensus Estimate of $561 million by 8.4%. The top line also rose 15.9% from $524.4 million in the year-ago quarter.
As of Sept. 30, 2026, IDACORP's cash and cash equivalents were $187.8 million compared with $215.7 million as of Dec. 31, 2025. Long-term debt totaled $3.86 billion at the end of the reported quarter compared with $3.33 billion at 2025-end.
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SO Q3 Earnings Beat on Data Center Demand, Outlook Raised
Key Takeaways
The Southern Company (SO - Free Report) posted third-quarter 2026 adjusted earnings of $1.94 per share, up 21.3% from $1.60 a year earlier. The result surpassed the Zacks Consensus Estimate of $1.71 by 13.45%, supported by warmer weather, stronger electricity sales, customer growth and improved Southern Power earnings.
Operating revenues rose 13% year over year to $8.84 billion, beating the $8.47 billion consensus by 4.35%. Data center electricity usage surged 59% from a year ago as large commercial customers increased demand.
Southern Company (The) Price, Consensus and EPS Surprise
Southern Company (The) price-consensus-eps-surprise-chart | Southern Company (The) Quote
SO Benefits From Broad-Based Electricity Demand
Weather-normal retail electricity sales climbed 3.5% year over year in the quarter, exceeding the 2.7% gain for the first nine months. Commercial sales rose 7.3%, while industrial volumes advanced 1.8%, reflecting gains in metals, lumber and transportation-related activity.
Residential electricity sales increased 1.3% on a weather-adjusted basis. Southern added approximately 15,000 electric residential customers and nearly 6,000 residential gas customers during the quarter. Over the past year, Southern added about 45,000 residential electric customers.
Southern Revenue Mix Gets Lift From Retail Power
Retail electric fuel revenues grew $226 million year over year to $1.49 billion, while non-fuel retail electric revenues increased $690 million to $5.13 billion. Stronger demand, warmer weather and rate and pricing contributions from commercial and industrial customers supported the gains.
Wholesale electric revenues advanced $41 million to $873 million, and natural gas revenues rose $39 million to $773 million. Other electric revenues declined $33 million to $229 million. Other revenues increased $57 million to $345 million, mainly on distributed infrastructure activity at PowerSecure.
SO Sees Gains Across Its Electric Businesses
Georgia Power's operating revenues increased 18.6% to $4.47 billion, while Alabama Power's revenues rose 8.2% to $2.51 billion. Mississippi Power reported $497 million in revenues, up 3.5%, extending growth across the traditional electric operating companies.
Southern Power's revenues climbed 14.0% to $699 million, while its reported net income reached $52 million, compared with $3 million a year earlier. Southern Company Gas earned $21 million, down from $25 million, contrasting with stronger results at the electric businesses.
Southern Faces Higher Costs Despite Profit Growth
Total operating expenses increased $614 million to $5.84 billion. Fuel and purchased-power costs rose $223 million, while non-fuel operations and maintenance expenses increased $205 million. Taxes other than income taxes climbed $146 million, largely reflecting the timing of Georgia Power property taxes.
Despite higher expenses, operating income grew $406 million to $3.00 billion, widening the operating margin to 33.9% from 33.2%. Net income attributable to Southern reached $2.05 billion from $1.71 billion. Adjusted results excluded charges tied to wind repowering, debt extinguishment and Nicor Gas capital investments.
SO Expands Large-Load Deals and Customer Protections
Southern signed about 4 gigawatts of additional large-load contracts since its second-quarter call, lifting contracted demand to 21 gigawatts across 33 projects. Another 7 gigawatts was in late-stage or finalizing phases, while its prospective pipeline exceeded 75 gigawatts.
More than 16 gigawatts of contracted projects had begun construction. Newer agreements include minimum bills covering at least the full incremental cost to serve customers, termination protections and collateral requirements. Management expects this structure to protect existing customers while supporting the large-load buildout.
Southern Expands Capital and Financing Plans
Southern identified about $4 billion of projects beyond its $81 billion base capital plan through 2030, taking projected investment to roughly $85 billion. Opportunities include natural gas facility upgrades and the Southeast Connector pipeline expansion. Additional generation investments could eventually lift the five-year program toward $100 billion.
The company settled $1.2 billion of previously priced equity in the quarter, completing $5.3 billion of forward-priced issuances. It now projects approximately $2 billion in remaining equity needs through 2030 and targets a 17% funds-from-operations-to-debt ratio by 2029. Nine-month operating cash flow reached $7.88 billion, compared with $7.21 billion a year earlier. Property additions rose to $10.20 billion from $8.70 billion.
SO Raises Full-Year Earnings Projection
This Zacks Rank #3 (Hold) company increased its full-year 2026 adjusted earnings outlook to $4.70 per share, 10 cents above the high end of its original $4.50-$4.60 range. The new outlook implies 9% annual adjusted earnings growth. Adjusted earnings totaled $4.40 per share through September, compared with $3.76 a year earlier. Southern estimates fourth-quarter adjusted earnings at 30 cents per share.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Management plans to refresh its financial outlook through 2031 on its fourth-quarter earnings call in February 2027. Stronger customer demand and potential additional investment could support higher near-term earnings guidance ranges, alongside its existing credit and customer affordability priorities.
Some Key Utility Earnings
While we have discussed Southern’s third-quarter results in detail, let’s see how some other utilities have fared this earnings season.
American Water Works Company Inc. (AWK - Free Report) reported third-quarter 2026 adjusted earnings of $2.00 per share, which missed the Zacks Consensus Estimate of $2.11 by 5.21%. The bottom line increased 5.8% from $1.89 in the year-ago quarter. Earnings benefited from authorized rate increases and acquisitions, while higher operating costs weighed on profitability.
Revenues of $1.51 billion surpassed the Zacks Consensus Estimate of $1.47 billion by 2.57% and rose 4.1% year over year.
Cash and cash equivalents totaled $121 million as of Sept. 30, 2026, compared with $98 million at the end of 2025. Net cash provided by operating activities increased 17.1% to $1.64 billion during the first nine months from $1.40 billion in the prior-year period.
IDACORP, Inc. (IDA - Free Report) reported third-quarter 2026 earnings of $2.73 per share, which surpassed the Zacks Consensus Estimate of $2.51 by 8.8%. The bottom line also increased 20.8% from $2.26 in the year-ago quarter.
The year-over-year improvement was primarily driven by higher Idaho base rates, continued customer growth and increased revenues from large contract customers.
Total revenues in the third quarter of 2026 were $608 million, outpacing the Zacks Consensus Estimate of $561 million by 8.4%. The top line also rose 15.9% from $524.4 million in the year-ago quarter.
As of Sept. 30, 2026, IDACORP's cash and cash equivalents were $187.8 million compared with $215.7 million as of Dec. 31, 2025. Long-term debt totaled $3.86 billion at the end of the reported quarter compared with $3.33 billion at 2025-end.