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Southern Company (SO) to Report Q1 Results: What Awaits?

The Southern Company SO is set to release first-quarter 2021 results before the opening bell on Thursday, Apr 29. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 85 cents per share on revenues of $5.4 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 performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Atlanta, GA-based service provider beat the consensus mark on successful cost containment measures as well as the positive effects of rates, usage and pricing changes. Southern Company had reported adjusted earnings per share of 47 cents, surpassing the Zacks Consensus Estimate of 43 cents. Further, revenues of $5.1 billion generated by this firm had come in above the Zacks Consensus Estimate by 0.93%.

As far as earnings surprises are concerned, Southern Company beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other, delivering an earnings surprise of 8.55%, 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 been revised 2.4% upward in the last seven days. Moreover, the estimated figure indicates an 8.97% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests an 8.5% decline from the year-ago period.

Factors to Consider This Quarter

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 increased its customer count by 1% year over year for the period ending December 2020. This trend most likely continued in the first quarter of 2021 because of healthy population growth across its electric and gas franchises.

However, on a somewhat bearish note, the power supplier’s total operating cost in the fourth quarter increased 3.9% year over year to $4.4 billion. The upward cost trajectory is likely to have continued in the first quarter due to escalation in the Vogtle nuclear project-related outlays, primarily stemming from coronavirus-induced disruptions. Further, Southern Company’s retail sales are also likely to have been impacted by the pandemic, denting the utility’s revenues and cash flows. 

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: Southern Company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 85 cents per share each.

Zacks Rank: Southern Company currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the utility’s 0.00% ESP makes surprise prediction difficult for the company this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for Southern Company, here are some firms from the utility space that you may want to consider on the basis of our model:

MYR Group Inc. MYRG has an Earnings ESP of +10.40% and a Zacks Rank #2. The firm is scheduled to release earnings on Apr 28.

You can see the complete list of today’s Zacks #1 Rank stocks here.

DTE Energy DTE has an Earnings ESP of +0.68% and a Zacks Rank #3. The firm is scheduled to release earnings on Apr 27.

Atmos Energy Corporation ATO has an Earnings ESP of +0.50% and is Zacks #3 Ranked. The firm is scheduled to release earnings on May 5.

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Southern Company The (SO): Free Stock Analysis Report
 
DTE Energy Company (DTE): Free Stock Analysis Report
 
MYR Group, Inc. (MYRG): Free Stock Analysis Report
 
Atmos Energy Corporation (ATO): Free Stock Analysis Report
 
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