What does 2015 look like for Southern Company?



Growth in retail sales

Southern Company (SO) anticipates 1.3% growth in retail sales in 2015 on a year-over-year, or YoY, basis. The company expects the Industrial segment to lead sales growth in 2015. It expects industrial electricity sales to grow at a rate of 1.7%.

According to Southern Company’s estimates, residential and commercial electricity sales should grow by 1% and 1.4%, respectively, in 2015. We’ll look at Southern Company’s guidance range for 2015.

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Guidance for fiscal year 2015

For fiscal year 2015, Southern Company expects its earnings to be $2.76–$2.88 per share. Southern lowered its guidance range. It was $2.89–$3.03 per share in 3Q14. For 1Q15, Southern Company expects earnings per share, or EPS, of $0.55 per share.

After 2015, Southern Company expects earnings to rise by 3%–4% each year.

High accuracy in guidance

Southern Company’s management is known for being highly accurate in forecasting its near-term earnings. In the last ten years, Southern Company never missed its guidance estimates. Also, it has the smallest guidance range among all of the power companies that are part of the Utilities Select Sector SPDR (XLU).

In 2014, Southern Company guided earnings to be in the range of $2.72–$2.80 per share. At the end of 2014, Southern Company achieved the top end of its guidance range. It had adjusted earnings of $2.80 per share.

Regulated utility companies—like Dominion Resources (D) and NextEra Energy (NEE)—give out smaller guidance ranges due to their stable and predictable business model. In contrast, companies—like Exelon Corporation (EXC)—with a high exposure to the unregulated power business—provide a wider guidance range due to higher volatility in their earnings.


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