Southern Company (SO) Q3 Earnings Top On Wholesale Unit

Power supplier Southern Company (NYSE:SO) reported third-quarter 2016 earnings per share (excluding certain one-time items) of $1.28, ahead of the Zacks Consensus Estimate and the year-ago adjusted profit of $1.17.

The strong numbers can be attributed to robust performance from its wholesale unit and favorable weather conditions.

The Atlanta-based utility’s quarterly revenue – at $6,264 million – came 16% higher than the third-quarter 2015 level of $5,401 million and was also ahead of the Zacks Consensus Estimate of $6,036.4 million.

Overall Sales Breakup

While wholesale sales jumped 18%, Southern Company’s retail electricity demand also increased amid warmer-than-normal weather conditions. This brought about an upward movement in overall electricity sales and usage. In fact, total electricity sales during the third quarter was up 5.7% from the same period last year.

Southern Company’s total retail sales rose 3.2%, with residential and commercial sales up by 8.9% and 3.4%, respectively. However, demand from industrial customers fell 3.3% from the year-ago period

Expenses Summary

Southern Company’s operations and maintenance cost increased 29% to $1,411 million, while the utility’s total operating expense for the period – at $4,322 million – was up 15% 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 Corp. (NYSE:EXC) and Duke Energy Corp. (NYSE:DUK) – currently retains a Zacks Rank #3 (Hold).

A better-ranked player from the same industry would be DTE Energy Company (NYSE:DTE) . This Zacks Rank #1 (Strong Buy) stock offers excellent value and is worth buying now. You can see the complete list of today’s Zacks #1 Rank stocks here.

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