Southern Company
🇺🇸 SO · NYSE/NASDAQ · US8425871071
Utilities
USD 94.70 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
24.2
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: 94.70 ÷ 3.91 = 24.2
TTM period through: 2025-12-31
Forward P/E (estimated): 20.9
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.1
Yield (Fwd)
3.13%
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): 3.10%
Net Debt/EBITDA (TTM)
4.5x
Latest quarter: 23.2x
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: 2025-12-31
Latest quarter (2025-12-31): 23.2x
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)
75.6%
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): 69.5%
Cash Flow Payout (TTM): 30.8%
FCF Coverage (TTM): -1.19x
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
12.6x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
📊 What Changed From Last Analysis?
Moved from WATCH to OPTIMAL: Refined valuation methodology to prioritize P/FFO (11.9x) over GAAP P/E given the utility's massive capital expenditure program, revealing the stock currently trades slightly below its P/FFO fair value range.
Summary
Southern Company is a premier regulated utility operating as a natural monopoly in the Southeast U.S. with an exceptionally secure dividend history. Trading at $94.70, the stock sits slightly below our P/FFO fair value estimate of $95-143, revealing strong underlying earnings power (P/FFO 11.9x) that is currently obscured by an elevated GAAP P/E. This represents a solid entry point for dividend investors seeking stable income, making it worth considering for new positions.
Sector Context
Southern Company operates as a premier regulated utility, generating and distributing electricity and natural gas primarily across the Southeast United States. For dividend investors, regulated utilities offer highly predictable, inflation-protected revenues due to their natural monopoly status, though massive capital expenditure programs often depress GAAP earnings and free cash flow while underlying operational cash flow (FFO) remains robust.
📊 Strategy Analysis
- • Trading at $94.70, slightly below the P/FFO fair value range of $95.43-$143.14, offering an attractive entry point when evaluating true cash generation.
- • Attractive P/FFO multiple of 11.9x reveals strong underlying cash generation power that is obscured by the elevated GAAP P/E of 24.2x.
- • Exceptional dividend safety and consistency, supported by a healthy 68.8% payout ratio and an unbroken streak of zero dividend cuts over the last decade.
- • Dominant natural monopoly position in the growing Southeast U.S. market, with excellent revenue visibility driven by structural power demand from data centers.
⚠ What to Watch
- • Substantial negative free cash flow of -$1.86 billion, driven by heavy ongoing capital expenditures for grid modernization, requiring external financing.
- • Net Debt/EBITDA of 4.48x exceeds our standard 4.0x threshold, creating a moderately elevated debt profile despite being somewhat typical for expanding utilities.
- • The current dividend yield of 3.10% sits at the very bottom of our ideal 3-6% range, limiting immediate income compared to some sector peers.
📊 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: 2026-04-18
Disclaimer: This information is for educational purposes only. Not financial advice.