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Southern Company (SO) Q3 Earnings & Revenues Top Estimates

Zacks Equity Research

Power supplier Southern Company SO reported third-quarter 2019 earnings per share (excluding certain one-time items) of $1.34, surpassing both the Zacks Consensus Estimate and the year-ago profit of $1.14. The robust performance primarily stemmed from positive effects of rates and pricing changes, supported by favorable weather conditions at the Atlanta, GA-based firm’s regulated utilities.

Leveraging the demographics of its operating territories (as in healthy population and job growth), the firm has been able to consistently expand its regulated business customer base. As part of that plan, Southern Company has added 30,000 residential electric and 21,000 residential gas customers so far in 2019, underpinning growth.

The Atlanta-based utility’s quarterly revenues – at $6 billion – beat the Zacks Consensus Estimate of $5.9 billion but was 2.7% lower than the third-quarter 2018 sales on account of loss of revenue from asset dispositions.

Southern Company (The) Price, Consensus and EPS Surprise


Southern Company (The) Price, Consensus and EPS Surprise

Southern Company (The) price-consensus-eps-surprise-chart | Southern Company (The) Quote

Vogtle Updates

Per Southern Company’s latest earnings presentation, it continues to progress toward completing the Units 3 and 4 of the Vogtle nuclear project by the November 2021 and November 2022 regulatory approved in-service dates. The utility also expects no change in the project’s total estimated costs.

Overall Sales Breakup

Southern Company’s wholesale power sales increased 2.3%. However, this was more than offset by a steep fall in retail electricity demand amid strategic sale of certain assets.

Consequently, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the third quarter were down 4.7% from the same period last year.

Southern Company’s total retail sales decreased 6.7%, with residential and commercial sales going down by 6.6% and 6.7%, respectively. Moreover, industrial sales declined 6.8%.

Expenses Summary

The power supplier’s operations and maintenance cost decreased 8% to $1.3 billion, while the utility’s total operating expense for the period – at roughly $4 billion – was essentially unchanged 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, investors interested in this space might look at Entergy Corporation ETR, which also carries a Zacks Rank of 2.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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