The Southern Company (SO)
Valuation Overview•Is The Southern Company Overvalued or Undervalued?
The market is pricing the stock in line with historical averages, assuming steady-state growth.
Moderate quality score of 46/100, reflecting stable operating margins and manageable leverage.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is broadly bullish, projecting solid upside alongside robust expected earnings growth. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
SO demonstrates adequate business quality with stable profitability. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company exhibits steady, low-single-digit revenue growth paired with stable bottom-line earnings. The company maintains healthy operational efficiency with a 24.1% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $8.4B | +10.6% | +0.3% | +7.7% | +5.4% | |
| EBITDA | $3.6B | — | +12.1% | — | — | |
| Net Income | $1.4B | -1.4% | +7.1% | — | +6.0% | |
| EPS (Diluted) | $1.20 | -1.8% | +6.3% | +5.9% | +4.2% | |
| Free Cash Flow | -$1.7B | -531.0% | -30.3% | -37.0% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 43.1% | 42.0% | 41.3% | 42.7% |
| Operating Margin | 24.1% | 24.7% | 21.7% | 21.9% |
| Net Margin | 14.5% | 15.6% | 13.9% | 13.3% |
| FCF Margin | -12.7% | -5.0% | -5.1% | -12.2% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $1.21 | $1.32 | +9.1% | ||
| Q1'26 | $0.56 | $0.55 | -1.4% | ||
| Q4'25 | $1.51 | $1.60 | +6.0% | ||
| Q3'25 | $0.88 | $0.91 | +4.0% | ||
| Q2'25 | $1.20 | $1.23 | +2.5% | ||
| Q1'25 | $0.51 | $0.50 | -1.2% | ||
| Q4'24 | $1.34 | $1.43 | +6.7% | ||
| Q3'24 | $0.92 | $1.10 | +19.6% |
Total return is +8.4% (1Y), lagging the benchmark by -16.6%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +8.5% | -0.8% | — |
| 1Y | +8.4% | -16.6% | +3.4% |
| 3YCAGR | +13.1% | -6.6% | +12.4% |
| 5YCAGR | +11.8% | -1.5% | +22.9% |
| 10YCAGR | +8.9% | -4.9% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about The Southern Company (SO) valuation, health, and returns.
The Southern Company is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. trading near fair value (DCF: $94.84)
The Southern Company has multiple valuation anchors: DCF Intrinsic Value: $94.84 | Peer Relative Fair Value: $88.99 | Wall Street Analyst Target: $102.09 (implying +9.7% upside). A convergence of these signals offers higher conviction.
The Southern Company displays fair financial health with a composite quality score of 46/100, supported by a Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 5.3%.
The Southern Company pays a 2.9% dividend yield, covered by a 69% payout ratio with 25 years of growth, supplemented by a 0.0% buyback yield.
The Southern Company's current growth trajectory is Accelerating. The company achieved +10.6% 1Y revenue growth and -1.8% 1Y EPS growth, compared to its 3Y revenue CAGR of +0.3%.
Wall Street consensus is Hold based on 34 analysts, beating EPS expectations in 83% of recent quarters with a 1-quarter streak. The consensus price target represents a +9.7% change from current levels.
Investment risks for The Southern Company include: -15.7% 1-year max drawdown. Volatility risk is characterized by a beta of -0.15x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.