Southern Company (SO) Q1 Earnings In Line, Retail Sales Fall

Power supplier Southern Company SO reported first-quarter 2019 earnings per share (excluding certain one-time items) of 70 cents, same as the Zacks Consensus Estimate. The in-line performance stemmed from lower costs and expenses.

However, Southern Company’s bottom line witnessed a fall from the year-ago quarter’s profit of 88 cents on lower sales from the retail segment and the divestment of its Gulf Power subsidiary in May last year.

The Atlanta-based utility’s quarterly revenue – at $5.4 billion – came 15.1% lower than the first-quarter 2018 sales and missed the Zacks Consensus Estimate of $5.8 billion.

Southern Company (The) Price, Consensus and EPS Surprise

 

Southern Company (The) Price, Consensus and EPS Surprise | Southern Company (The) Quote

Overall Sales Breakup

Southern Company’s wholesale power sales decreased 13.3%. This came on top of the steep fall in retail electricity demand amid milder weather conditions.

Consequently, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the first quarter were down 11.2% from the same period last year.

Southern Company’s total retail sales decreased 10.5%, with residential and commercial sales going down by 15.9% and 10.6%, respectively. Moreover, industrial sales declined 5%.

Expenses Summary

The power supplier’s operations and maintenance cost decreased 9.6% to $1.3 billion, while the utility’s total operating expense for the period – at $1.7 billion – was down 65.6% from the prior-year level.

Zacks Rank & Stock Picks

Southern Company – one of the largest generators of electricity in the nation along with the likes of Exelon Corporation EXC and Duke Energy Corporation DUK – currently retains a Zacks Rank #2 (Buy).

Apart from Southern Company, one can also look at another player in the space, Ameren Corporation AEE, that also sports a Zacks Rank #2.

Ameren boasts of a good earnings surprise history. It has a 75% track of outperforming estimates over the last four quarters at an average rate of 8.6%.

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