SO stock weakens
Since Southern Company (SO) reported its second-quarter earnings on August 8, its stock has lost more than 10.0%. Although Southern Company reported higher earnings in the second quarter, another project cost increase of $1.1 billion for Plant Vogtle pulled the stock lower.
Southern Company’s (SO) nuclear power plant Plant Vogtle, which is under construction, has faced several cost overruns and delays in the last few years. The total project cost has reached ~$27.0 billion, more than double the original estimate from a decade ago. The in-service dates from Plant Vogtle’s Units 3 and 4 remain unchanged at November 2021 and 2022, respectively.
The plant’s track record and the expected duration of project completion suggest the possibility of additional cost increases and delays. Southern Company’s largest subsidiary, Georgia Power, owns 45.7% of Plant Vogtle.
With its ballooning cost trends, Plant Vogtle is progressing at a time when nuclear generation is becoming highly uneconomical in the United States. This trend is due to relatively cost-effective options such as natural gas and renewables.
Six brokerages trimmed their target prices on Southern Company stock after it reported its second-quarter earnings. The chart above shows a comparative price movement of Southern Company stock and utilities at large, as well as the broader markets. So far this year, Southern Company stock has lost more than 7.0% while the broader utilities (XLU) sector has risen ~4.0%.