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Southern Co. (SO) Up 0.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Southern Co. (SO - Free Report) . Shares have added about 0.5% in that time frame, outperforming the S&P 500.

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

Southern Company Q1 Earnings Meet Estimates

Southern Company reported first-quarter 2019 earnings per share (excluding certain one-time items) of 70 cents, same as the Zacks Consensus Estimate. The in-line performance stemmed from lower costs and expenses.

However, Southern Company’s bottom line witnessed a fall from the year-ago quarter’s profit of 88 cents on lower sales from the retail segment and the divestment of its Gulf Power subsidiary in May last year.

The Atlanta-based utility’s quarterly revenue – at $5.4 billion – came 15.1% lower than the first-quarter 2018 sales and missed the Zacks Consensus Estimate of $5.8 billion.

Overall Sales Breakup

Southern Company’s wholesale power sales decreased 13.3%. This came on top of the steep fall in retail electricity demand amid milder weather conditions.

Consequently, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the first quarter were down 11.2% from the same period last year.

Southern Company’s total retail sales decreased 10.5%, with residential and commercial sales going down by 15.9% and 10.6%, respectively. Moreover, industrial sales declined 5%.

Expenses Summary

The power supplier’s operations and maintenance cost decreased 9.6% to $1.3 billion, while the utility’s total operating expense for the period – at $1.7 billion – was down 65.6% from the prior-year level.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.17% due to these changes.

VGM Scores

Currently, Southern Co. has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Southern Co. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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