Morningstar | Southern Initiates In-Line 2019 Earnings Guidance; Good News on Construction Progress at Vogtle
We are reaffirming our $50 per share fair value estimate after Southern Co. reported solid 2018 earnings, initiated 2019 guidance, and updated the status of the Vogtle nuclear project. Reported 2018 EPS was $3.07, $0.03 higher than our estimate and consensus.Southern initiated 2019 earnings guidance of $2.98 to $3.10 per share versus our estimate of $3.04 and the consensus estimate of $3.02 per share. Long-term adjusted EPS growth of 4%-6% was reaffirmed, starting from the midpoint of the initial 2018 guidance range of $2.87 per share. Our 2022 EPS estimate of $3.58 represents a compound annual growth rate of 5.7% from the original 2018 guidance.
Although management is usually upbeat on the Vogtle progress, this time we agree that the update was positive. Productivity has increased significantly, averaging 141,000 weekly earned hours in February to date versus 110,000 needed to meet the current schedule. This pace will preserve the schedule margin, allowing both units to reach commercial operation well ahead of the November 2021 and November 2022 dates approved by regulators. At the current activity level, fuel load on Unit 3 could begin in October 2020, just 18 months from now.
Another data point that gives us additional confidence that Southern can meet the revised schedule is that all four Westinghouse AP1000 units in China have now achieved commercial operation. Southern continues to maintain staff in China, watching and learning from this start-up experience. Southern indicated that the Nuclear Regulatory Commission has eliminated or reduced what would have been required as first-of-a-kind test issues for Vogtle due to the experience in China.
Southern and contractor Bechtel are undergoing a re-baseline process that we suspect will indicate an accelerated estimated completion date when management provides the next update at the 2019 first-quarter earnings release in May.
Southern is a holding company. Through its subsidiaries, Alabama Power Company, Georgia Power Company, and Mississippi Power Company, the company is engaged in the generation, transmission, distribution, and purchase of electricity and the sale of electric service in Alabama, Georgia, and Mississippi. The company's Southern Power Company subsidiary develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity at market-based rates in the wholesale market. The company's Southern Company Gas subsidiary is an energy services holding company whose primary business is the distribution of natural gas in Illinois, Georgia, Virginia, and Tennessee.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.