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How Southern Company’s 3Q15 Earnings Shook Out

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Nov. 3 2015, Published 8:18 p.m. ET

Southern Company’s 3Q15 EPS

Southern Company (SO) reported its 3Q15 earnings on October 28, 2015. Southern Company reported adjusted EPS (earnings per share) of $1.17 in 3Q15, higher than analysts’ expectations of $1.16. The company’s 3Q15 earnings per share were higher by 7.34%, compared with its 3Q14 EPS of $1.09.

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Market reaction to Southern Company’s 3Q15 earnings

Southern Company’s (SO) reported 3Q15 earnings surprised the markets with higher-than-expected operating earnings per share, but the earnings missed the consensus revenue estimate by 4.7%. Southern Company’s stock price closed down 0.71% from the previous day’s closing price.

The Utilities Select Sector SPDR ETF (XLU), a key fund in the utility sector, was down 1.06% on the same day. NextEra Energy (NEE), Duke Energy (DUK), and Dominion Resources (D), its top competitors, were down by 1.10%, 1.19%, and 1.16%, respectively, on the same day.

On a year-to-date basis until October 30, 2015, Southern Company was down 8.65% against a 7.78% drop in XLU. Southern Company has a weight of 7.57% in XLU.

Turnaround story in the utility sector

Year-to-date, there has been a selloff in utility companies shares. In its meeting held on October 27–28, 2015, the Federal Reserve declined to raise interest rates, a reflection of its less upbeat view of the outlook of the US economy.

Going forward, the Federal Reserve could take a cautious approach in hiking interest rates at regular intervals. Risk-averse investors find income-generating stocks to be an option, and many money managers consider utility stocks to be options as well.

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