SO beats adjusted earnings estimate

Southern Company (SO) reported its second-quarter financial results today. The company reported EPS of -$0.15 for the second quarter compared to its EPS of -$1.38 in the comparable quarter last year. Southern Company’s power plants continued to strain its financials in the quarter.

SO’s earnings in the reported quarter included an estimated loss of ~$1.1 billion related to increased project costs at its Plant Vogtle Units 3 and 4.

Plant Vogtle Dents Southern Company’s Q2 2018 Earnings

Adjusted for these charges, Southern Company saw EPS of $0.80 in the second quarter compared to EPS of $0.73 in the second quarter of 2017, displaying a healthy YoY (year-over-year) rise of ~10%. SO opened on a weak note on August 8, and it fell ~4% during early trading.

Earnings drivers

Southern Company’s total revenue came in at $5.63 billion in the reported quarter, a rise of 3.6% from its revenue in the same quarter last year.

Southern Company’s total electric deliveries, including retail and wholesale, increased 2.2% in the second quarter compared to the same period last year. Southern Company’s total number of customers increased 0.9% YoY in the quarter.

The company’s operating expenses totaled $5.56 billion in the second quarter, a fall from $7.08 billion in the second quarter of 2017. It incurred expenses of $3.0 billion in the second quarter of 2017 due to a loss at the Kemper County IGCC (integrated gasification combined cycle) plant after frequent delays and cost overruns.

Southern Company’s largest subsidiary, Georgia Power, owns a 45.7% share in Plant Vogtle. The project’s estimated cost has increased from $7.3 billion to $8.4 billion. The in-service dates from Plant Vogtle’s Units 3 and 4 remain unchanged at November 2021 and 2022, respectively.

Utilities have been lagging the broader markets this year. Southern Company stock is up ~4%, while utilities (XLU) (IDU) at large are up 2% year-to-date. The broader markets have soared more than 6% so far this year.

Latest articles

16 Jul

PG&E Stock Continued to Slide on July 15

WRITTEN BY Vineet Kulkarni

The large swings for PG&E (PCG) stock may not end anytime soon.

On Wednesday, United Rentals is scheduled to report its second-quarter results after the market closes. The stock beat analysts' estimates in 12 of the last 13 quarters.

16 Jul

Q2 Earnings Were a Mixed Bag for J.B. Hunt

WRITTEN BY Anirudha Bhagat

J.B. Hunt reported mixed Q2 earnings, as its revenues grew YoY but earnings declined.

16 Jul

What to Expect From Nucor’s Q2 Earnings This Week

WRITTEN BY Mohit Oberoi, CFA

Nucor is scheduled to release its second-quarter earnings on Thursday. The company has seen an upwards price action of 7.4% year-to-date.

16 Jul

Will HollyFrontier's Q2 Results Improve?

WRITTEN BY Maitali Ramkumar

HollyFrontier (HFC) is expected to release its second-quarter results on August 1.

On Monday, Citigroup downgraded Tiffany (TIF) stock to “neutral” from “buy” and reduced its target price to $100 from $115 per share.