The Southern Company
The Southern Company Fundamental Analysis
The Southern Company (SO) shows moderate financial fundamentals with a PE ratio of 24.15, profit margin of 14.69%, and ROE of 12.50%. The company generates $29.5B in annual revenue with moderate year-over-year growth of 5.83%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 29.8/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze SO's fundamental strength across five key dimensions:
Efficiency Score
WeakSO struggles to generate sufficient returns from assets.
Valuation Score
ExcellentSO trades at attractive valuation levels.
Growth Score
ExcellentSO delivers strong and consistent growth momentum.
Financial Health Score
WeakSO carries high financial risk with limited liquidity.
Profitability Score
WeakSO struggles to sustain strong margins.
Key Financial Metrics
Is SO Expensive or Cheap?
P/E Ratio
SO trades at 24.15 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, SO's PEG of -8.89 indicates potential undervaluation.
Price to Book
The market values The Southern Company at 2.91 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 2.90 times EBITDA. This is generally considered low.
How Well Does SO Make Money?
Net Profit Margin
For every $100 in sales, The Southern Company keeps $14.69 as profit after all expenses.
Operating Margin
Core operations generate 24.63 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $12.50 in profit for every $100 of shareholder equity.
ROA
The Southern Company generates $2.79 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
The Southern Company generates strong operating cash flow of $9.79B, reflecting robust business health.
Free Cash Flow
The Southern Company generates weak or negative free cash flow of $-3.28B, restricting financial flexibility.
FCF Per Share
Each share generates $-2.98 in free cash annually.
FCF Yield
SO converts -3.14% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
24.15
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-8.89
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.91
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.54
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.83
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.65
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.13
vs 25 benchmark
ROA
Return on assets percentage
0.03
vs 25 benchmark
ROCE
Return on capital employed
0.05
vs 25 benchmark
How SO Stacks Against Its Sector Peers
| Metric | SO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 24.15 | 19.20 | Worse (Expensive) |
| ROE | 12.50% | 1033.00% | Weak |
| Net Margin | 14.69% | 9191.00% | Weak |
| Debt/Equity | 1.83 | 6.63 | Strong (Low Leverage) |
| Current Ratio | 0.65 | 1.68 | Weak Liquidity |
| ROA | 2.79% | -237.00% (disorted) | Weak |
SO outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews The Southern Company's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
19.87%
Industry Style: Defensive, Dividend, Income
High GrowthEPS CAGR
-11.06%
Industry Style: Defensive, Dividend, Income
DecliningFCF CAGR
62.67%
Industry Style: Defensive, Dividend, Income
High Growth