Southern’s earnings fell in 4Q14 – in line with street estimates



Southern’s adjusted profits

Southern Company (SO) released its 4Q14 results on February 4, 2015. Southern Company reported dull fourth quarter earnings. On an adjusted basis, Southern Company’s profits fell by $84 million, or 19.7%, to $343 million for the quarter—compared to $427 million in 4Q13.

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EPS falls in 4Q14

Southern’s adjusted earnings per share, or EPS, decreased by more than 20% year-over-year, or YoY, this quarter. Southern’s adjusted EPS in 4Q14 was $0.38 per share—compared to $0.48 per share in 4Q13.

So far, the power utility sector disappointed in 4Q14. Prior to Southern Company, CMS Energy (CMS), American Electric Power Company (AEP), and Entergy Corporation (ETR) reported a significant drop in 4Q14 adjusted earnings on a YoY basis.

As far as fiscal year 2014 goes, Southern Company saw a nominal YoY growth of 3.7% in earnings. With the exception of the fourth quarter, Southern Company’s adjusted earnings grew on a YoY basis in all of the other quarters in 2014.

By weight, Southern Company is the third top holding of the Utilities Select Sector SPDR (XLU). Southern Company forms 7.56% of XLU’s total holding.

Earnings in line with estimates

Southern Company’s 4Q14 earnings were in line with street estimates. Analysts’ consensus estimate for Southern’s 4Q14 adjusted EPS was $0.384. A major part of Southern Company’s operation lies in the stable regulated power business. So, the variation in estimates and actual earnings is smaller.

In the series, we’ll use the adjusted or non-GAAP (generally accepted accounting principles) earnings so that readers can analyze the actual performance of Southern Company’s operations during the fourth quarter. Adjusted earning takes earnings from operations into account. It excludes non-recurring and one-time line items.


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