Yahoo Finance Can Southern (SO) Maintain Its Beat Streak in Q1 Earnings?
The Southern Company SO is set to release first-quarter results on May 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 90 cents per share on revenues of $7 billion.
Let’s delve into the factors that might have influenced the power supplier’s performance in the March quarter. But it’s worth taking a look at Southern Company’s previous-quarter results first.
Highlights of Q4 Earnings & Surprise History
In the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark due to lower-than-expected operating expenses to go with the positive effects of weather, rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of 64 cents, ahead of the Zacks Consensus Estimate of 59 cents. However, revenues of $6 billion came in 21.9% below the consensus mark, primarily due to a drop in overall electricity sales.
SO topped the Zacks Consensus Estimate for earnings in each of the last four quarters. The utility player has a trailing four-quarter earnings surprise of 8.5%, on average. This is depicted in the graph below:
Southern Company (The) Price and EPS Surprise
Southern Company (The) price-eps-surprise | Southern Company (The) Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the first-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 13.9% rise year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests an 8.2% increase from the year-ago period.
Factors to Consider
Southern Company's seven major regulated utilities serve approximately nine million electric and natural gas customers. Leveraging the demographics of its operating territories, the firm has been successfully expanding its regulated business customer base. As proof of that effort, Southern Company has added 200,000 residential customers since 2020. This trend is most likely to have continued in the January-March period of 2024 because of healthy economic development across its service territories.
But on a bearish note, the power supplier’s operations and maintenance cost in the first quarter might have gone up due to the prevailing inflationary situation. This, in turn, is likely to have hurt overall earnings. In particular, our estimate for operations and maintenance outgo is pegged at $1.6 billion, indicating a 9.9% increase from the year-ago quarter. Our model also assumes a 33.1% year-over-year jump in fuel costs to $1.4 billion.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Southern Company is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -2.53%.
Zacks Rank: SO currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for The Southern Company, here are some firms from the utilities space that you may want to consider on the basis of our model:
Eversource Energy ES has an Earnings ESP of +2.76% and a Zacks Rank #2. The firm is scheduled to release earnings on May 2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
For 2024, Eversource Energy has a projected earnings growth rate of 3.9%. Valued at around $20.9 billion, ES has lost 22.2% in a year.
Ameren Corporation AEE has an Earnings ESP of +0.30% and a Zacks Rank #3. The firm is scheduled to release earnings on May 2.
For 2024, Ameren has a projected earnings growth rate of 4.8%. Valued at around $19.6 billion, AEE has lost 17% in a year.
NiSource Inc. NI has an Earnings ESP of +1.24% and a Zacks Rank #3. The firm is scheduled to release earnings on May 8.
For 2024, NiSource has a projected earnings growth rate of 6.9%. Valued at around $12.5 billion, NI has lost 2.1% in a year.
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Ameren Corporation (AEE) : Free Stock Analysis Report
Southern Company (The) (SO) : Free Stock Analysis Report
NiSource, Inc (NI) : Free Stock Analysis Report
Eversource Energy (ES) : Free Stock Analysis Report
