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Retail Unit Helps Southern Company (SO) Beat Q4 Earnings

Nilanjan Choudhury

Power supplier Southern Company SO reported fourth-quarter 2018 earnings per share (excluding certain one-time items) of 25 cents, a penny above the Zacks Consensus Estimate. The outperformance stemmed from favorable regulatory results and strength of its retail unit.

However, Southern Company’s bottom line witnessed a fall from the year-ago quarter’s profit of 51 cents on lower sales from the wholesale segment.

The Atlanta-based utility’s quarterly revenue – at $5.3 billion – came 5.2% lower than the fourth-quarter 2017 sales but beat the Zacks Consensus Estimate of $4.9 billion.

Southern Company (The) Price, Consensus and EPS Surprise

 

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

Overall Sales Breakup

Southern Company’s wholesale power sales decreased 5.3%. This was partially offset by the marginal rise in retail electricity demand amid favorable weather conditions and constructive regulatory results.

Consequently, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the fourth quarter was down 0.8% from the same period last year.

Southern Company’s total retail sales improved 0.7%, with residential and commercial sales going up by 3.7% and 0.1%, respectively. However, industrial sales declined 1.4%.

Expenses Summary

The power supplier’s operations and maintenance cost increased 2% to $1.7 billion, while the utility’s total operating expense for the period – at $4.8 billion – was down 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 Corporation EXC and Duke Energy Corporation DUK – currently retains a Zacks Rank #2 (Buy).

Apart from Southern Company, one can also look at another player in the space – Ameren Corporation AEE that also sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren boasts of a good earnings surprise history. It has a 75% track of outperforming estimates over the last four quarters at an average rate of 8.6%.

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Southern Company (The) (SO) : Free Stock Analysis Report
 
Ameren Corporation (AEE) : Free Stock Analysis Report
 
Exelon Corporation (EXC) : Free Stock Analysis Report
 
Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
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