The Southern Company Just Released Its Full-Year Results And Analysts Are Updating Their Estimates
Last week saw the newest yearly earnings release from The Southern Company (NYSE:SO), an important milestone in the company's journey to build a stronger business. Results look mixed - while revenue fell marginally short of analyst estimates at US$21b, statutory earnings beat expectations 3.3%, with Southern reporting profits of US$4.53 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Southern after the latest results.
See our latest analysis for Southern
Taking into account the latest results, the latest consensus from Southern's eleven analysts is for revenues of US$22.2b in 2020, which would reflect a reasonable 3.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to crater 29% to US$3.20 in the same period. Before this earnings report, analysts had been forecasting revenues of US$22.5b and earnings per share (EPS) of US$3.20 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$66.97. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Southern, with the most bullish analyst valuing it at US$74.00 and the most bearish at US$55.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Southern's past performance and to peers in the same market. We would highlight that Southern's revenue growth is expected to slow, with forecast 3.9% increase next year well below the historical 6.2%p.a. growth over the last five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 3.2% per year. So it's pretty clear that, while Southern's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Southern analysts - going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Southern's balance sheet, and whether we think Southern is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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