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Analyzing Southern Company’s 1Q17 Earnings and Growth Prospects

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Part 2
Analyzing Southern Company’s 1Q17 Earnings and Growth Prospects PART 2 OF 6

Southern Company’s 1Q17 Earnings Rise 14%, Beat Estimates

Earnings

Following Southern Company’s (SO) strong 1Q17 results on May 3, 2017, its chair, president, and CEO, Thomas A. Fanning, said, “Each of our major business units had a great start to the year.”

Southern Company posted earnings of per share (or EPS) of $0.66 in the reported quarter, compared to its earnings of $0.58 per share in the same quarter last year. This change accounts for a year-over-year rise of 14% in the utility’s EPS.

Southern Company’s 1Q17 Earnings Rise 14%, Beat Estimates

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Long-term earnings drivers

The strong performance of Southern Company Gas, which was acquired in July last year, uplifted its parent company’s performance significantly, which managed to offset the negative influences of milder weather in 1Q17. Southern Company’s earnings were negatively affected by increased interest expenses and share issuances in the quarter.

Recently, Southern Company’s Kemper County and Vogtle nuclear power plants dented its performance. Cost overruns due to construction delays had a negative impact on Southern Company’s financials.

On the positive side, Southern Company’s capital spending plan of $39.3 billion for the next five years will likely strengthen its regulated rate base and could bode well for its earnings growth. The company has also been increasing its focus on renewables.

Southern Company’s management issued a 2017 annual earnings guidance range of $2.90–$3.02 per share. This guidance implies an expected annual rise of 5.0% from the midpoint, which is in line with the industry (XLU) average. For 2Q17, Southern Company’s management has issued earnings guidance of $0.70 per share.

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