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Southern Company: Factors That Could Drive 4Q16 Revenue

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Southern Company to report on February 22

Southern Company (SO), one of the largest regulated utilities, is expected to report its 4Q16 and 2016 financial results on February 22, 2017. Analysts estimate that the company will report total revenues of $4.4 billion for the quarter, which ended December 31, 2016. It reported revenues of $3.6 billion in 4Q15.

The company beat analysts’ revenue estimates in two of the last eight quarters.

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Revenue drivers

Weather and customer base are two important factors that could significantly drive Southern Company’s 4Q16 earnings. Cooling degree days in the United States were significantly higher in 4Q16 than in 4Q15. It should have triggered higher electricity utilization in the United States, which would bode well for utilities’ (XLU) top lines in the quarter.

However, in Florida, NextEra Energy (NEE) reported poor revenues in 4Q16, driven by unfavorable weather. An increased customer base may offset unfavorable impacts of weather to some extent.

Southern Company gets more than 85.0% of its revenue from regulated operations. With its AGL Resources acquisition, the company’s regulated rate base rose nearly 15.0% to $50.0 billion. An expanded rate base and more regulated gas distribution operations could improve Southern Company’s revenue for the quarter.

Peer Duke Energy (DUK) will report its financial results on February 16, 2017.

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