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Here's How Southern Company (SO) Looks Ahead of Q2 Earnings
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The Southern Company (SO - Free Report) is set to release second-quarter 2020 results before the opening bell on Thursday, Jul 30. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 66 cents per share on revenues of $5 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the June quarter. But it’s worth taking a look at Southern Company’s previous quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark on positive effects of rates, usage and pricing changes. Southern Company reported earnings per share (excluding certain one-time items) of 78 cents that surpassed the Zacks Consensus Estimate by 6 cents. However, the utility’s quarterly revenues – at $5 billion – missed the Zacks Consensus Estimate of $5.6 billion on account of adverse weather.
As far as earnings surprises are concerned, Southern Company is on an excellent footing, having gone past the Zacks Consensus Estimate in each of the last four reports, with the average surprise being 10.21%. This is depicted in the graph below:
The Zacks Consensus Estimate for second-quarter earnings per share has been revised 1.5% downward in the last 7 days. Moreover, the estimated figure indicates 17.5% deterioration from the year-ago reported earnings. The Zacks Consensus Estimate for revenues also suggests a 2.1% decrease from the prior-year reported figure of $5.1 billion.
Factors to Consider This Quarter
Southern Company's seven major regulated utilities serve approximately nine million electric and natural gas customers. Leveraging the demographics of its operating territories, the firm has been successfully expanding its regulated business customer base. As part of that effort, Southern Company added 41,000 residential electric and 30,000 residential gas customers in 2019, a trend that most likely continued in the second quarter of 2020 because of healthy population growth across its electric and gas franchises.
Meanwhile, the power supplier’s operations and maintenance cost in the first quarter decreased 1.4% to $1.3 billion. The downward cost trajectory is likely to have continued in the second quarter due to Southern Company’s aggressive cost control initiatives.
The outbreak of novel coronavirus is likely to have negatively impacted Southern Company’s second-quarter earnings by steeply reducing industrial and commercial electricity demand. In particular, with approximately a third of the firm’s total retail sales coming from industrial customers, a sluggish consumption pattern severely affects the fortunes of Southern, as compared to other utilities that are less dependent on the industrial component. However, this is likely to have been offset by higher residential demand. With the coronavirus containment measures forcing people to stay indoors and work from home, usage from the residential class is likely to have increased in the second quarter.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Southern Company is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company stands at 0.00%.
Zacks Rank: Southern Company has a Zacks Rank of 3.
Stocks to Consider
While earnings beat looks uncertain for Southern Company, here are some firms from the utility space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this season:
American Water Works Company, Inc. (AWK - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 5.
WEC Energy Group (WEC - Free Report) has an Earnings ESP of +0.96% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Aug 4.
CenterPoint Energy, Inc. (CNP - Free Report) has an Earnings ESP of +7.87% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Aug 6.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Here's How Southern Company (SO) Looks Ahead of Q2 Earnings
The Southern Company (SO - Free Report) is set to release second-quarter 2020 results before the opening bell on Thursday, Jul 30. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 66 cents per share on revenues of $5 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the June quarter. But it’s worth taking a look at Southern Company’s previous quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark on positive effects of rates, usage and pricing changes. Southern Company reported earnings per share (excluding certain one-time items) of 78 cents that surpassed the Zacks Consensus Estimate by 6 cents. However, the utility’s quarterly revenues – at $5 billion – missed the Zacks Consensus Estimate of $5.6 billion on account of adverse weather.
As far as earnings surprises are concerned, Southern Company is on an excellent footing, having gone past the Zacks Consensus Estimate in each of the last four reports, with the average surprise being 10.21%. This is depicted in the graph below:
Southern Company The Price and EPS Surprise
Southern Company The price-eps-surprise | Southern Company The Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter earnings per share has been revised 1.5% downward in the last 7 days. Moreover, the estimated figure indicates 17.5% deterioration from the year-ago reported earnings. The Zacks Consensus Estimate for revenues also suggests a 2.1% decrease from the prior-year reported figure of $5.1 billion.
Factors to Consider This Quarter
Southern Company's seven major regulated utilities serve approximately nine million electric and natural gas customers. Leveraging the demographics of its operating territories, the firm has been successfully expanding its regulated business customer base. As part of that effort, Southern Company added 41,000 residential electric and 30,000 residential gas customers in 2019, a trend that most likely continued in the second quarter of 2020 because of healthy population growth across its electric and gas franchises.
Meanwhile, the power supplier’s operations and maintenance cost in the first quarter decreased 1.4% to $1.3 billion. The downward cost trajectory is likely to have continued in the second quarter due to Southern Company’s aggressive cost control initiatives.
The outbreak of novel coronavirus is likely to have negatively impacted Southern Company’s second-quarter earnings by steeply reducing industrial and commercial electricity demand. In particular, with approximately a third of the firm’s total retail sales coming from industrial customers, a sluggish consumption pattern severely affects the fortunes of Southern, as compared to other utilities that are less dependent on the industrial component. However, this is likely to have been offset by higher residential demand. With the coronavirus containment measures forcing people to stay indoors and work from home, usage from the residential class is likely to have increased in the second quarter.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Southern Company is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company stands at 0.00%.
Zacks Rank: Southern Company has a Zacks Rank of 3.
Stocks to Consider
While earnings beat looks uncertain for Southern Company, here are some firms from the utility space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this season:
American Water Works Company, Inc. (AWK - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 5.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
WEC Energy Group (WEC - Free Report) has an Earnings ESP of +0.96% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Aug 4.
CenterPoint Energy, Inc. (CNP - Free Report) has an Earnings ESP of +7.87% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Aug 6.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>