Southern Co (NYSE: SO) in the fourth quarter 2016 ended 31st December has reported the adjusted earnings per share of 24 cents, missing the analysts’ estimates for the adjusted earnings per share of 33 cents. On the other hand, the company had reported the adjusted revenue growth of $5.18 billion in the fourth quarter 2016, beating the analysts’ estimates for revenue of $4.42 billion due to a $1.11 billion contribution from Southern Company Gas. As a result, the stock surged over 0.4% this morning (on Feb 22nd, 2017 as of 9:46 AM EST; Source: Google finance)
Southern has in Q4 posted the 1.7 percent increase in the kilowatt-hour sales to retail customers versus last year. SO has posted a sharp decline in profit in the final quarter of the year despite a surge in revenue driven by acquisitions. The earnings were driven by the retail revenue at its traditional electric operating companies and weather-related revenue impacts but offset by higher operations and maintenance costs, increased share issuances and lower customer usage. The full year 2016 earnings were positively influenced by the continued success of renewable energy projects at wholesale subsidiary Southern Power. SE has posted in 2016 the earnings of $2.45 billion compared with earnings of $2.37 billion, for the same period in 2015.
Moreover, the total electricity sales volume has increased 6.2% with wholesale volume grew 31%. The acquisitions of Southern Company Gas, PowerSecure and a 50% stake in Southern Natural Gas has increased the volume and strengthened the business.
Southern expects for 2017, the earnings per share excluding items to be in the range of $2.90 – $3.02. For the first quarter 2017, the earnings per share excluding items is expected to be $0.57. Further, SE expects approximately 5 percent projected long-term earnings per share growth excluding items. However, SE expects the estimated impact to 2021 earnings per share from Trump Administration plan of 15% tax rate to be slightly accretive.
The estimated probable losses relating to Mississippi Power Company’s construction and associated rate recovery of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) had significantly impacted the earnings and earnings per share for the three and twelve months ended December 31st, 2016 and 2015.
Meanwhile, Southern has announced a regular quarterly dividend of 56 cents per share on the company’s common share, payable March 6th, 2017, to shareholders of record as of February 21st, 2017
The Southern stock has fallen 0.6% in a year (source: Google Finance). According to tipranks.com, 3 analysts has covered the stock while recommending a “Moderate Buy”. SO has an average price target of $54, which is a further upside of 11.85% (as of Feb 21st)