Southern Company
🇺🇸 SO · NYSE/NASDAQ · US8425871071
Utilities
USD 92.05 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
23.5
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 92.05 ÷ 3.92 = 23.5
TTM period through: 2026-03-31
Forward P/E (estimated): 20.6
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.0
Yield (Fwd)
3.30%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 3.16%
Div. Growth (5Y CAGR)
1.4%
Growth Streak
1 yrs
Consecutive years of increase
Net Debt/EBITDA (TTM)
5.2x
Latest quarter: 19.1x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2026-03-31
Latest quarter (2026-03-31): 19.1x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
77.6%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 70.0%
Cash Flow Payout (TTM): 31.2%
FCF Coverage (TTM): -1.25x
ROE
11.0%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
12.5x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Southern Company is a premier regulated utility operating as a natural monopoly in the Southeast U.S., featuring highly predictable revenues and a proven 25-year dividend growth history. Trading at $92.05 vs our fair value P/FFO range of $94.55-$141.83, the stock is modestly undervalued and worth considering for new positions. The 3.16% yield provides reliable income, and investors should consider accumulating below $94 for a margin of safety despite current interest rate headwinds.
Sector Context
Southern Company generates, transmits, and distributes electricity and natural gas to millions of customers across the Southeast U.S. As a regulated utility, it operates as a natural monopoly with high capital requirements. In this sector, metrics like P/FFO are essential to capture true earnings power that GAAP P/E obscures, and higher debt levels are acceptable given the highly predictable, regulated cash flows.
Temporary Opportunity Identified
Utilities are facing temporary valuation pressure due to persistent inflation concerns and Federal Reserve officials signaling a willingness to maintain higher interest rates.
📊 Strategy Analysis
- • Trading at $92.05 vs our fair value P/FFO range of $94.55-$141.83, offering a modest margin of safety for a premium utility asset.
- • P/FFO of 11.68x suggests the stock is fundamentally undervalued relative to its cash-generating power, mitigating the optically high GAAP P/E of 23.51.
- • Flawless dividend track record with 25 consecutive years of increases, backed by stable, regulated monopoly cash flows and expanding data center energy demand.
⚠ What to Watch
- • Net Debt/EBITDA of 5.20x sits above the standard 4.0x threshold, warranting monitoring despite higher leverage being customary for regulated utilities.
- • Substantial negative free cash flow (-$1.71 billion) driven by heavy ongoing infrastructure investments, necessitating continuous reliance on capital markets.
- • Significant long-term structural liabilities, including an estimated $8.5-$9.0 billion for coal ash (CCR) remediation and ongoing EPA regulatory compliance pressures.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-05-30
Disclaimer: This information is for educational purposes only. Not financial advice.