Southern Co (SO) AI Stock Analysis

• Market Cap: $108.35B
• Dividend Yield: 3.4%
• Average Volume (3M): 6.95M
• Price to Earnings (P/E): 22.2
• Beta (1Y): -0.03
• Revenue Growth: 9.40%
• EPS Growth: -6.05%
• Country: US
• Employees: 28,314
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Electric
• EPS (TTM): 0.55
• Shares Outstanding: 1,119,391,200
• 10 Day Avg. Volume: 8,212,021
• 30 Day Avg. Volume: 6,952,054
• PEG Ratio: -11.13
• Price to Book (P/B): 2.67
• Price to Sales (P/S): 3.25
• P/FCF Ratio: -26.79
• Enterprise Value/Market Cap: 1.60
• Enterprise Value/Revenue: 5.85
• Enterprise Value/Gross Profit: 13.46
• Enterprise Value/Ebitda: 12.19
• 1Y Price Target: $99.82
• Price Target Upside: 2.24% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 14
• EPS Forecast (FY): 4.56
• Revenue Forecast (FY): $30.49B

• Rating: 68 Neutral
• Price Target: $104.00 ▲(6.52% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is driven primarily by mixed financial quality: stable utility earnings but high leverage and weak/volatile free cash flow. Offsetting this, technical trends are strong and the latest earnings call outlined above-average multi-year EPS and sales growth supported by a large contracted load pipeline, while valuation is balanced by a solid dividend yield but a relatively high P/E.

Positive Factors

Regulated rate-base growth via large capex plan

A large, predominantly regulated $81B five-year capital plan drives durable rate-base expansion (~9% annual), supporting predictable regulated returns and multi-year earnings growth. Regulatory cost recovery mechanisms make this a structural earnings-growth driver if approvals and execution proceed.

Substantial contracted large-load pipeline

A >75 GW large-load pipeline with 26 signed contracts and 10 GW fully contracted creates persistent incremental demand and contracted revenue streams. Contract minimums and staged ramps underpin long-term volume growth, supporting sustained retail sales and capacity utilization across planning horizons.

DOE-backed subsidiary credit facilities improve funding flexibility

DOE Title XVII loan guarantees and Federal Financing Bank arrangements at the subsidiary level materially improve financing options and reduce borrowing costs for operating utilities. Ring‑fenced, non‑parent obligations enhance subsidiary funding flexibility and lower execution risk for regulated capital projects.

Negative Factors

High and persistent leverage

Persistent leverage (~1.8–2.0x equity) constrains financial flexibility and raises sensitivity to interest rates or adverse regulatory outcomes. High debt levels limit optionality for incremental investments and increase refinancing and interest-cost risk over the medium term, pressuring credit metrics.

Weak and volatile free cash flow

Volatile or negative free cash flow in several years indicates the company often cannot fully self-fund its investment program. This structural cash-generation weakness raises reliance on external financing and elevates execution and dilution risks as capital intensity persists over multiple years.

Large capex increase creates financing and dilution risk

A 30% year-over-year capex increase requires significant external funding; near-term equity programs (ATM, mandatory convertible) and remaining equity needs raise potential dilution. Execution, regulatory approvals, and additional financing needs could pressure capital structure and shareholder returns.

Southern Co Business Overview & Revenue Model

Company Description

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates through Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services segments. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations. In addition, it owns and/or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, three nuclear generating stations, 13 combined cycle/cogeneration stations, 45 solar facilities, 15 wind facilities, one fuel cell facility, and four battery storage facility; and constructs, operates, and maintains 76,289 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 8.7 million electric and gas utility customers. Further, the company offers digital wireless communications and fiber optics services. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.

How the Company Makes Money

Southern Company generates revenue primarily through the sale of electricity and natural gas to its customer base, which includes residential, commercial, and industrial users. Key revenue streams include regulated electricity sales, where rates are set by state utility commissions, ensuring a stable income source. Additionally, the company earns revenue from natural gas distribution services and from its investments in renewable energy projects, which contribute to its long-term growth strategy. Southern Company has established partnerships with various stakeholders, including governmental entities and other energy firms, to expand its renewable energy portfolio and enhance its infrastructure, thus contributing to its overall earnings. The company's diverse energy generation mix, which includes coal, natural gas, nuclear, and renewable sources, allows it to adapt to changing market conditions and regulatory environments, further solidifying its revenue base.

Southern Co Financial Statement Overview

Summary

Earnings and margins are relatively steady for a regulated utility (income statement strength), but the balance sheet is constrained by persistently high leverage and cash generation is the key weak spot with volatile/negative free cash flow in multiple years, indicating ongoing reliance on external funding.

Income Statement

Revenue has generally trended upward over the period (with a dip in 2023), supported by solid profitability for a regulated utility. Net profit margins are steady in the low-to-mid teens (about 10%–16%), and net income improved versus earlier years, indicating resilient earnings power. The main weakness is uneven growth (notably the 2023 contraction) and some year-to-year volatility in operating profitability indicators, which tempers the score despite overall stability.

Balance Sheet

The balance sheet reflects a leveraged utility profile: debt is high and persistent, with debt running at roughly ~1.8x–2.0x equity across the years. Equity has grown, and returns on equity are fairly consistent around the low-teens, which is a positive sign of steady regulated returns. However, leverage remains the key constraint and leaves less flexibility if rates, capital spending needs, or regulatory outcomes turn unfavorable.

Cash Flow

Operating cash flow is consistently positive, but free cash flow has been weak and volatile—negative in multiple years and very low in 2024—suggesting heavy investment/capital spending demands typical of the sector. Cash generation relative to accounting earnings is inconsistent (including periods where free cash flow does not cover net income), increasing reliance on external funding. The 2025 free-cash-flow figure improves materially, but the sharp swing versus prior years lowers confidence in durability.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	29.55B	26.72B	25.25B	29.28B	23.11B
Gross Profit	8.81B	13.34B	11.71B	10.63B	10.25B
EBITDA	14.33B	13.24B	11.78B	10.31B	8.39B
Net Income	4.34B	4.40B	3.98B	3.54B	2.41B
Balance Sheet
Total Assets	155.72B	145.18B	139.33B	134.89B	127.53B
Cash, Cash Equivalents and Short-Term Investments	1.64B	1.07B	748.00M	1.92B	1.80B
Total Debt	65.82B	66.28B	63.49B	59.13B	55.47B
Total Liabilities	116.85B	108.51B	104.11B	100.36B	94.97B
Stockholders Equity	36.02B	33.21B	31.44B	30.41B	28.16B
Cash Flow
Free Cash Flow	-3.59B	833.00M	-1.54B	-1.62B	-1.07B
Operating Cash Flow	9.80B	9.79B	7.55B	6.30B	6.17B
Investing Cash Flow	-13.96B	-9.40B	-9.67B	-8.43B	-7.35B
Financing Cash Flow	4.70B	-208.00M	999.00M	2.34B	1.95B

Southern Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 97.63
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SO, the sentiment is Positive. The current price of 97.63 is above the 20-day moving average (MA) of 93.45, above the 50-day MA of 89.60, and above the 200-day MA of 90.21, indicating a bullish trend. The MACD of 2.34 indicates Negative momentum. The RSI at 69.96 is Neutral, neither overbought nor oversold. The STOCH value of 83.97 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SO.

Southern Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AEP	80 Outperform	$71.35B	16.71	12.33%	3.25%	7.66%	37.42%
DUK	71 Outperform	$102.21B	18.33	9.74%	3.61%	4.80%	14.44%
NEE	69 Neutral	$192.93B	24.54	13.05%	2.84%	26.96%	-6.80%
SO	68 Neutral	$108.35B	22.16	12.54%	3.40%	9.40%	-6.05%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
EXC	65 Neutral	$50.08B	15.92	9.94%	3.68%	6.07%	15.20%
D	63 Neutral	$55.08B	16.69	10.63%	4.59%	12.72%	4.90%

Southern Co Corporate Events

Southern Subsidiaries Secure DOE-Backed Credit Facilities

On February 20, 2026, Alabama Power and Georgia Power, both Southern Co. subsidiaries, executed separate loan guarantee agreements with the U.S. Department of Energy under the Title XVII loan guarantee program. On the same date, each utility also entered into note purchase agreements and related future advance promissory notes with the Federal Financing Bank, collectively establishing distinct DOE-guaranteed credit facilities for Alabama Power and Georgia Power.

The arrangements are designed at the subsidiary level, and Southern Co. itself is not a party to the loan documents and bears no direct obligations under them. The structure underscores the ring‑fenced financing approach commonly used in the regulated utility sector, potentially affecting the capital structure and funding flexibility of the individual operating companies without changing the parent’s balance sheet commitments.

The most recent analyst rating on (SO) stock is a Buy with a $108.00 price target. To see the full list of analyst forecasts on Southern Co stock, see the SO Stock Forecast page.

Southern Co Wins Approval for Major Georgia Power Expansion

On December 19, 2025, the Georgia Public Service Commission approved a settlement between Georgia Power and the commission’s advocacy staff that certifies 9,885 megawatts of new capacity from the company’s 2029-2031 all-source request for proposals and supplemental resources plan, locking in project-specific costs and requiring construction monitoring by regulators. The package includes company-owned projects representing about $16.3 billion in capital investment, roughly $14 billion of which is expected between 2026 and 2029, and commits Georgia Power to structure its next base rate case so that incremental revenue from large-load customers produces at least $556 million per year in levelized customer benefits—equivalent to about $8.50 a month in bill relief for a typical residential customer—over 2029 to 2031.

The most recent analyst rating on (SO) stock is a Hold with a $94.00 price target. To see the full list of analyst forecasts on Southern Co stock, see the SO Stock Forecast page.

Southern Co Reaches Settlement with Georgia PSC

On December 9, 2025, Georgia Power Company reached a settlement agreement with the Georgia Public Service Commission’s Public Interest Advocacy Staff to resolve its application for the certification of capacity from the 2029-2031 All-Source Request for Proposals. The agreement, pending approval by the Georgia PSC, would certify 9,885 megawatts of resources at their respective costs, including $16.3 billion in company-owned projects. The settlement aims to apply downward pressure on customer rates, potentially saving typical residential customers $102 annually from 2029 to 2031. The Georgia PSC is set to vote on the agreement on December 19, 2025, but the outcome remains uncertain.

The most recent analyst rating on (SO) stock is a Hold with a $92.00 price target. To see the full list of analyst forecasts on Southern Co stock, see the SO Stock Forecast page.