What changed
$SO — AVOID 📊
The Southern Company, through its subsidiaries, engages in the sale of electricity.
🎯 Q1 FY26 | Rev $8B | EPS $1.32 vs $1.21 🟢 | Margin 24.0%
💡 Consensus appears to expect continued above-average EPS growth justifying the premium multiple, but the company's capex-intensive model, rising interest expense, and regulatory risks imply mean reversion to lower utility multiples. The 8.9% EPS beat is likely not sustainable to maintain such a premium.
📉 Reward/Risk: 0.2:1
🏢 Business Quality: 6/10 - Stable regulated utility with consistent earnings, but capital-heavy, negative FCF, and high leverage (net debt $67.8B) constrain quality relative to peers.
📊 Valuation: Rich - Current P/E of 24.1x (trailing) and 20.4x (forward FY) vs sector peer band 11.1x-19.7x.
Also in play: $H $CLF $X $NUE $STLD $RIO