Southern Company Beats Q3 Estimates, Maintains Vogtle Schedule



EPS has grown 1.7% YoY

Southern Company (SO), the fourth-biggest utility by market capitalization, released its third-quarter earnings on November 7. The company reported an EPS of $1.14 for the quarter ending on September 30, which beat analysts’ estimates. In the third quarter of 2017, Southern Company had an EPS of $1.12.

Favorable weather and constructive regulatory results were some of the main drivers behind Southern Company’s earnings in the third quarter. The earnings were partially offset by higher depreciation and amortization expenses and interest expenses during the quarter.

SO stk

Southern Company stock was weak due to issues related to its power plants in 2018. The stock has fallen ~3%, while broader utilities (XLU) (IDU) have risen more than 4% year-to-date.

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Third-quarter earnings

Southern Company reported total revenues of $6.16 billion for the quarter ending on September 30—a fall of 0.7% compared to the third quarter of 2017. Southern Company’s total retail sales increased more than 2% in the third quarter—compared to the third quarter of 2017. The number of customers declined 3.6% in the third quarter compared to the same period in 2017. The decreased customer base was due to the sale of Southern Company’s subsidiaries in July—Florida City Gas, Elizabethtown Gas, and Elkton Gas.

Southern Company didn’t change Plant Vogtle project’s cost or in-service schedule from its update in the second quarter. Southern Company’s Plant Vogtle has faced a number of cost overruns and delays in the last few years. The total project cost has exceeded $27.0 billion—more than double the original estimate a decade ago. Since Southern Company’s second-quarter earnings, the stock has fallen almost 8%.

Southern Power, Southern Company’s subsidiary, is mainly involved in competitive operations. Southern Power agreed to sell the Mankato Energy Center, a natural gas-fired power plant, to Xcel Energy (XEL) for $650 million.

Southern Company has given an EPS guidance of $0.23 for the fourth quarter, which indicates an EPS of $3.07 in 2018—less than 2% growth compared to 2017.


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