Southern Company (SO) Surpasses Q2 Earnings, Revenues Miss

Power supplier Southern Company (NYSE:SO) reported second-quarter 2019 earnings per share (excluding certain one-time items) of 80 cents, surpassing the Zacks Consensus Estimate of 72 cents and in line with the year-ago profit. The robust performance stemmed from positive effects of rates and pricing changes, favorable weather conditions, as well as lower costs and expenses.

The Atlanta-based utility’s quarterly revenue – at $5.1 billion – came 9.4% lower than the second-quarter 2018 sales and missed the Zacks Consensus Estimate of $5.2 billion. The miss was primarily on account of loss of revenue from the divestment of its Gulf Power subsidiary and other assets.

Overall Sales Breakup

Southern Company’s wholesale power sales decreased 7.6%. This came on top of the 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 second quarter were down 7.3% from the same period last year.

Southern Company’s total retail sales decreased 7.2%, with residential and commercial sales going down by 9.2% and 7.4%, respectively. Moreover, industrial sales declined 5.2%.

Expenses Summary

The power supplier’s operations and maintenance cost decreased 13.6% to $1.3 billion, while the utility’s total operating expense for the period – at $3.8 billion – was down 32.5% 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 (NYSE:EXC) and Duke Energy Corporation (NYSE:DUK) – currently retains a Zacks Rank #3 (Hold).

A better-ranked player in the space is Atlantic Power Corporation (TSX:AT) . It carries a Zacks Rank #2 (Buy).

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

The 2019 Zacks Consensus Estimate for this Dedham, MA-based utility is 24 cents, representing some 50% earnings per share growth over 2018. Next year’s average forecast is 27 cents pointing to another 12.5% growth.

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