The Southern Co. (SO) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

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Comparison

Company

Score

Quality

Valuation

Financial

Technical

American Electric Power Co., Inc.

Duke Energy Corp.

PG&E Corp.

Constellation Energy Corp.

Consolidated Edison, Inc.

The Southern Co.

Exelon Corp.

NextEra Energy, Inc.

Xcel Energy, Inc.

Dominion Energy, Inc.

Sempra

Why is The Southern Co. ?

Weak Long Term Fundamental Strength with a 7.18% CAGR growth in Operating Profits over the last 5 years

Low ability to service debt as the company has a high Debt to EBITDA ratio of 5.59 times
The company has been able to generate a Return on Capital Employed (avg) of 6.62% signifying low profitability per unit of total capital (equity and debt)
OPERATING CASH FLOW(Y) Highest at USD 9,220 MM
DIVIDEND PER SHARE(HY) Highest at USD 6.58

With ROCE of 7.19%, it has a expensive valuation with a 1.63 Enterprise value to Capital Employed

The stock is trading at a discount compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of 1.72%, its profits have risen by 8.1% ; the PEG ratio of the company is 3

Underperformed the market in the last 1 year

The stock has generated a return of 1.72% in the last 1 year, much lower than market (S&P 500) returns of 13.22%

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to The Southern Co. should be less than 10%
Overall Portfolio exposure to Power should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Power)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is The Southern Co. for you?

Low Risk, Medium Return

Absolute

Risk Adjusted

Volatility

The Southern Co.

1.72%

0.60

17.59%

S&P 500

13.22%

0.65

20.20%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

6.90%

EBIT Growth (5y)

7.18%

EBIT to Interest (avg)

2.81

Debt to EBITDA (avg)

5.59

Net Debt to Equity (avg)

1.96

Sales to Capital Employed (avg)

0.28

Tax Ratio

18.71%

Dividend Payout Ratio

71.61%

Pledged Shares

Institutional Holding

71.07%

ROCE (avg)

6.62%

ROE (avg)

12.95%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

2.87

EV to EBIT

22.68

EV to EBITDA

12.96

EV to Capital Employed

1.63

EV to Sales

5.87

PEG Ratio

3.02

Dividend Yield

3.26%

ROCE (Latest)

7.19%

ROE (Latest)

12.66%

Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Mildly Bearish

RSI

No Signal

Bollinger Bands

Mildly Bearish

Mildly Bullish

Moving Averages

Mildly Bullish (Daily)

KST

Mildly Bearish

Dow Theory

Mildly Bearish

OBV

No Trend

Mildly Bearish

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

5What is working for the Company

OPERATING CASH FLOW(Y)

Highest at USD 9,220 MM

DIVIDEND PER SHARE(HY)

Highest at USD 6.58

-6What is not working for the Company

RAW MATERIAL COST(Y)

Grown by 12.37% (YoY

DEBT-EQUITY RATIO (HY)

Highest at 204.5 %

INTEREST(Q)

Highest at USD 898 MM

NET PROFIT(Q)

Fallen at -25.76%

Here's what is working for The Southern Co.

Operating Cash Flow

Highest at USD 9,220 MM and Grown

In each year in the last three years

MOJO Watch

The company has generated higher cash revenues from business operations

Operating Cash Flows (USD MM)

Dividend per share

Highest at USD 6.58 and Grown

In each year in the last five years

MOJO Watch

Company is distributing higher dividend from profits generated

DPS (USD)

Depreciation

Highest at USD 1,449 MM

in the last five periods

MOJO Watch

The expenditure on assets done by the company may have gone into operation

Depreciation (USD MM)

Here's what is not working for The Southern Co.

Interest

At USD 898 MM has Grown at 18.94%

period on period (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (USD MM)

Interest

Highest at USD 898 MM

in the last five periods and Increased by 18.94% (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (USD MM)

Net Profit

Fallen at -25.76%

Year on Year (YoY)

MOJO Watch

Near term Net Profit trend is negative

Net Profit (USD MM)

Debt-Equity Ratio

Highest at 204.5 %

in the last five Semi-Annual periods

MOJO Watch

The company is borrowing more to fund its operations; it's liquidity situation may be stressed

Debt-Equity Ratio

Raw Material Cost

Grown by 12.37% (YoY)

MOJO Watch

The company's ability to pass on the cost of raw materials to customers has deteriorated; this may lead to a fall in profit margin

Raw Material Cost as a percentage of Sales