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Southern Co. (SO) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
Old Second Bancorp (OSBC) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Southern Co. (SO) closed the most recent trading day at $51.78, moving -0.15% from the previous trading session. This change lagged the S&P 500's 0.37% gain on the day. At the same time, the Dow added 0.25%, and the tech-heavy Nasdaq gained 0.34%.

Heading into today, shares of the power company had gained 5.41% over the past month, outpacing the Utilities sector's gain of 3.74% and the S&P 500's gain of 1.83% in that time.

Wall Street will be looking for positivity from SO as it approaches its next earnings report date. The company is expected to report EPS of $0.74, down 15.91% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.59 billion, down 12.31% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.03 per share and revenue of $21.99 billion. These totals would mark changes of -1.3% and -6.39%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for SO. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.62% higher. SO is holding a Zacks Rank of #2 (Buy) right now.

Looking at its valuation, SO is holding a Forward P/E ratio of 17.12. This valuation marks a discount compared to its industry's average Forward P/E of 19.91.

We can also see that SO currently has a PEG ratio of 3.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Utility - Electric Power was holding an average PEG ratio of 3.55 at yesterday's closing price.

The Utility - Electric Power industry is part of the Utilities sector. This group has a Zacks Industry Rank of 84, putting it in the top 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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