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Can Southern (SO) Maintain Its Beat Streak in Q2 Earnings?
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The Southern Company (SO - Free Report) is set to release second-quarter results on Aug 1. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 91 cents per share on revenues of $6.3 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 results first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark on lower-than-expected operating expenses to go with the positive effects of weather, rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of $1.03, ahead of the Zacks Consensus Estimate of 90 cents. However, revenues of $6.6 billion came in 5.7% below the consensus mark, affected by a drop in overall electricity sales.
SO topped the Zacks Consensus Estimate for earnings in each of the last four quarters. The utility has a trailing four-quarter earnings surprise of 9.3%, on average. This is depicted in the graph below:
The Zacks Consensus Estimate for the second-quarter bottom line has been revised 2.2% downward in the past seven days. The estimated figure indicates a 15.2% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9.1% increase from the year-ago period.
Factors to Consider
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 proof of that effort, Southern Company added more than 13,000 new residential electric customers and in excess of 7,000 residential natural gas customers in the first quarter of 2024. This trend is most likely to have continued in the April-June period of 2024 because of healthy economic development across its service territories.
On a further bullish note, the power supplier’s operations and maintenance cost in the second quarter might have come down due to prudent management. This, in turn, is likely to have buoyed overall earnings. In particular, our estimate for operations and maintenance outgo is pegged at $1.4 billion, indicating a 4.8% drop from $1.5 billion reported in the year-ago quarter.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for The Southern Company this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
SO has an Earnings ESP of +0.38% and a Zacks Rank #3.
Other Stocks to Consider
Southern Company is not the only company in the utilities space looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
TransAlta Corporation (TAC - Free Report) has an Earnings ESP of +20.00% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 1.
TransAlta Corporation beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 174.7%, on average. Valued at around $2.2 billion, TAC has lost 28.3% in a year.
The AES Corporation (AES - Free Report) has an Earnings ESP of +10.20% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.
For 2024, AES has a projected earnings growth rate of 8.5%. Valued at around $12.5 billion, AES has lost 19% in a year.
Dominion Energy (D - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 1.
For 2024, Dominion Energy has a projected earnings growth rate of 38.2%. Valued at around $44.1 billion, D has edged down 1.5% in a year.
Image: Shutterstock
Can Southern (SO) Maintain Its Beat Streak in Q2 Earnings?
The Southern Company (SO - Free Report) is set to release second-quarter results on Aug 1. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 91 cents per share on revenues of $6.3 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 results first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark on lower-than-expected operating expenses to go with the positive effects of weather, rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of $1.03, ahead of the Zacks Consensus Estimate of 90 cents. However, revenues of $6.6 billion came in 5.7% below the consensus mark, affected by a drop in overall electricity sales.
SO topped the Zacks Consensus Estimate for earnings in each of the last four quarters. The utility has a trailing four-quarter earnings surprise of 9.3%, on average. 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 the second-quarter bottom line has been revised 2.2% downward in the past seven days. The estimated figure indicates a 15.2% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9.1% increase from the year-ago period.
Factors to Consider
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 proof of that effort, Southern Company added more than 13,000 new residential electric customers and in excess of 7,000 residential natural gas customers in the first quarter of 2024. This trend is most likely to have continued in the April-June period of 2024 because of healthy economic development across its service territories.
On a further bullish note, the power supplier’s operations and maintenance cost in the second quarter might have come down due to prudent management. This, in turn, is likely to have buoyed overall earnings. In particular, our estimate for operations and maintenance outgo is pegged at $1.4 billion, indicating a 4.8% drop from $1.5 billion reported in the year-ago quarter.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for The Southern Company this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
SO has an Earnings ESP of +0.38% and a Zacks Rank #3.
Other Stocks to Consider
Southern Company is not the only company in the utilities space looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
TransAlta Corporation (TAC - Free Report) has an Earnings ESP of +20.00% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
TransAlta Corporation beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 174.7%, on average. Valued at around $2.2 billion, TAC has lost 28.3% in a year.
The AES Corporation (AES - Free Report) has an Earnings ESP of +10.20% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.
For 2024, AES has a projected earnings growth rate of 8.5%. Valued at around $12.5 billion, AES has lost 19% in a year.
Dominion Energy (D - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 1.
For 2024, Dominion Energy has a projected earnings growth rate of 38.2%. Valued at around $44.1 billion, D has edged down 1.5% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.