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Retail Unit Helps Southern Company (SO) Beat Q3 Earnings

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Power supplier Southern Company (SO - Free Report) reported third-quarter 2018 earnings per share (excluding certain one-time items) of $1.14, above the Zacks Consensus Estimate of $1.07 and the year-ago profit of $1.12.

The outperformance stemmed from favorable regulatory results and strength of its retail unit. These positives were partly offset by decrease in revenue from the wholesale segment.

The Atlanta-based utility’s quarterly revenue – at $6.2 billion – came marginally lower than the third-quarter 2017 sales but beat the Zacks Consensus Estimate of $6 billion.

Southern Company (The) Price, Consensus and EPS Surprise

Southern Company (The) Price, Consensus and EPS Surprise | Southern Company (The) Quote

Overall Sales Breakup

While Southern Company’s wholesale power sales decreased 3.8%, this was more than offset by the strength in retail electricity demand amid favorable weather conditions and constructive regulatory results.

Consequently, there was an upward movement in overall electricity sales and usage. In fact, total electricity sales during the third quarter was up 2.1% from the same period last year.

Southern Company’s total retail sales improved 3.9%, with residential, industrial and commercial sales going up by 6.2%, 2.4% and 3.2%, respectively.

Expenses Summary

The power supplier’s operations and maintenance cost increased 4.7% to $1.4 billion but the utility’s total operating expense for the period – at $4 billion – was down 5.3% from the prior-year level.

Zacks Rank & Stock Picks

Southern Company – one of the largest generators of electricity in the nation along with the likes of Exelon Corp. (EXC - Free Report) and Duke Energy Corp. (DUK - Free Report) – currently retains a Zacks Rank #2 (Buy).

Apart from Southern Company, one can also look at another player in the space – Ameren Corp. (AEE - Free Report) that sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren boasts of an excellent earnings surprise history. It has a 100% track of outperforming estimates over the last four quarters at an average rate of 15.4%.

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