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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Southern Company (XNYS:SO) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
SO
Name:
THE SOUTHERN COMPANY (XNYS:SO)
Sector:
1.59B
Industry:
Utilities�Regulated Electric
CEO:
Mr. Thomas Fanning
Total Employees:
27,300
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 1.65% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE SOUTHERN COMPANY(SO) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND UTILITIES�REGULATED ELECTRIC INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
77.87
One Month Price Target:
$78.09
Six Month Price Target :
$79.17
Likely Price in One Year's Time:
Ticker:
$80.47
Likely Trading Range Today Under (Normal Volatility)
$77.65
Price Upper limit ($) :
$78.18
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$74.75
This week:
$70.88
This month :
$63.9
Other Primary facts
Market Cap:
82.68B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
1.06B
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.77%
-11.77%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$92.36
$85.68
$63.38
$70.06
Medium risk (<10%) entry points
Buy Call
Sell Call
$83.50
Buy Put:
Sell Put:
$82.07
$72.22
$73.67
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
SO
Sharpe Ratio:
2.37%
Comparison:
SO, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 101.90% higher than the industry
& ratio is 3.78% higher than the market/S&P 500 average
Average Returns/Yield of
SO
Daily returns:
0.06%
Weekly returns:
0.28%
Monthly returns:
1.11%
Yearly returns:
7.85%
Comparison of returns:
Average annual returns/yield (last 3 years) is 70.34% above industry average
Classification:
SO, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.42
Statistical test of Returns:
SO has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.98%
Weekly Volatility:
4.43%
Monthly Volatility:
8.86%
Yearly Volatility:
30.68%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.66%
Volatility in last five trading days has been -15.96% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.01%
Weekly VaR:
-8.97%
Monthly VaR:
-17.94%
How Much Can the price of
SO
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-15%
Worst case (decline):
-62.15%
This translates to price declining to:
$66.01
This translates to price declining to:
$29.47
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
SO is a 26.63% riskier investment compared to the market/S&P 500 & is 8.49% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -2.40% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
SO
Beta in relation to market/S&P 500--0.50
Expected beta in 1 year's time:
0.749
Expected beta in 3 year's time:
1.059
Unlevered (debt free) Beta:
0.204
Beta in relation to Nasdaq (XNAS):
0.497
Beta in relation to all global stocks::
0.791
Beta Comparison & Analysis
Beta of competitors/peers::
0.468
Beta is 6.09% higher than peers
Average Industry Beta:
0.5
Beta is -0.52% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
-
-
Alpha provided | Alpha Analysis
Alpha provided:
0.068
Alpha is 434.26% above industry average alpha yield
Alpha is 434% higher than market/& is unsustainably high
Analysis of Cost of Capital of
SO
Equity cost of capital:
0.066
Equity cost of capital is -0.27% below industry mean WACC
Unlevered (without debt) cost of capital:
2.69%
Before-tax cost of debt:
3.38%
After-tax cost of debt:
2.67%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.67%
WACC is -6.67% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$22.44
Revenue growth rate per share of (3Y):
2.51
Annual revenue growth rate is 243.90% above the industry average
EPS:
$2.14
Expected Annual growth rate of EPS (3Y):
-20.75%
Expected future EPS growth rate is 235.53% higher than the Utilities�Regulated Electric industry
Free cash flow (FCF) per share:
$0.88
Balance sheet equity growth per share: 11.58%
Equity growth rate per share is 97.31% higher than the industry
Debt per share
$49.06
EBITDA per share
$7.90
Valuation Analysis Today of
SO
P/E Ratio:
27.55
P/E Ratio of Competitors/Peers:
23.89
P/E ratio is 15.32% higher than main peers & is -0.51% lower than the industry
Stock price/value with industry average P/E ratio: $59.25
SO is 31.42% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $63.87
Present value of the expected future dividends only: $47.82
P/S (Price to Sales ratio):
3.47
Price to sales ratio is 19.55% above the industry mean
P/B (Price to book value ratio):
2.51
Price to free cash flow: 88.63
Price to free cash flow ratio is -64.58% lower than the industry
Net income growth rate (3Y):
4.65%
Net income growth rate is -257.85% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 30.50%
Dividend yeild: 3.42%
Previous Dividend: $0.68
Previous adjusted dividend: $0.68
Previous Dividend: $2.66
Expected next dividend best case: $0.70
Expected next dividend worst case: $0.66
Average dividend payment (long-term): $0.65
Average dividend increase/decrease (growth rate) % per period: 0.94%
Expected next dividend payment date: 09/05/2022
Expected next dividend record date: 15/08/2022
Expected next dividend declaration date: 18/07/2022
Previous dividend payment date: 06/06/2022
Previous dividend record date: 16/05/2022
Previous dividend declaration date: 19/04/2022
Dividend History:
2022-05-13--$0.68
2021-11-12--$0.66
2021-05-14--$0.66
2022-02-18--$0.66
2021-08-13--$0.66
2021-02-12--$0.64
Dividend growth rate is -194.00% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
159.84%
Net debt to equity ratio:
162.64%
Debt to assets ratio:
40.54%
Net debt to assets ratio:
41.25%
Debt-to-asset ratio is -35.49% below industry average
Ability to repay debt:
Interest coverage ratio:
4.54
Interest coverage ratio is 76.50% more than industry average
Looking forward:
Debt growth rate:
12.77%
Annual debt growth is -72% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.621
Statistical significance of correlation:
SO has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.597
Stock price is 4.01% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.597
Correlation of price movement with Nasdaq (^IXIC):
0.042
Covariance of price movement with the market:
0.048
Kurtosis
20.357
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.96
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
SO
Gross Profit Margin Ratio:
188%
Operating Profit Margin Ratio:
14.61%
Operating profit margin is 25.55% higher than the industry
Net Profit Margin Ratio:
188%
Effective Tax Rate:
10.23%
Effective tax rate is -49.20% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
7.06%
Return on equity (ROE) is -22.39% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
1.79%
Return on assets (ROA) is -22.61% lower than the industry
Financial Leverage:
1.7x
Current Ratio:
0.89
Current ratio is -62.77% below industry average
Cash Conversion Cycle (days):
-400.7
Cash conversion cycle is -524.13% below industry average
The remaining useful life of property plant & equipment is: 1.3 years
Stock based compensation to net income ratio:
3.69%
In-depth Efficiency Analysis
Revenue generated per employee:
873.7K
Each employee generates -68% less revenue than industry average revenue per employee
EBITDA generated per employee:
307.6K
Each employee generates -74% less EBITDA than industry average revenue per employee
Profit generated per employee:
84.3K
Each employee generates -79% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
58.3K
Each employee generates -277% less free cash flow than industry average revenue per employee
Assets/Capital per employee
4.4M
Each employee generates -277% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
SO
DUK-PA
DUKE ENERGY CORPORATION (XNYS:DUK)
Dominion Energy, Inc. (XNYS:D)
NATIONAL GRID PLC (XNYS:NGG)
AMERICAN ELECTRIC POWER COMPANY, INC. (XNAS:AEP)
SEMPRA ENERGY (XNYS:SRE)
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED (XNYS:PEG)
AMERICAN WATER WORKS COMPANY, INC. (XNYS:AWK)
Eversource Energy (XNYS:ES)
Current Analyst Ratings
Strong buy�4%
Buy�17%
Hold�33%
Sell�8%
Strong sell�8%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
23.85B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
12.47B
11.38B
-
-
-
-
10.55B
10.55B
-
1.85B
4.00B
8.40B
3.48B
2.30B
2.44B
250.00M
2.30B
Statement of Cash Flow
Date:
Period:
989.00M
Differed Income Tax :
40.00M
Stock Based Compensation :
85.00M
Change in Working Capital :
819.00M
Accounts Receivables:
-
Other Working Capital:
- 1137000.00K
Other Non-Cash Items:
- 1373000.00K
Net Cash Provided by Operating Activities:
1.59B
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.66B
-
1.66B
-
1.57B
6.06B
9.30B
- 23615000.00K
5.28B
435.00M
1.29B
833.00M
135.12B
119.34B
-
128.64B
2.25B
2.58B
57.00M
454.00M
5.15B
10.43B
52.15B
23.63B
85.29B
-
95.72B
-
9.51B
-
23.12B
March 31, 2022 at 6:00:00 AM
23.02B
32.63B
128.35B
10.04B
54.73B
53.1B
-
- 1555000.00K
- 1555000.00K
-
-
-
- 702000.00K
509.00M
- 193000.00K
-
- 156000.00K
1.67B
1.83B
1.59B
-
1.59B
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
SO
2023
2024
2025
2026
2027
$72.10
$74.51
$77.00
$79.57
$82.23