SO - Embedded Expectations Analysis - 2019 04 26
The Southern Company (SO:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 37.9x Uniform P/E, implying bullish expectations for the firm. However, management may be concerned about the progress of their Plant Vogtle construction project, labor and non-fuel O&M costs, and worker productivity.Specifically, management may be concerned about the progress of their Plant Vogtle construction project and related rebaselining efforts, and may be exaggerating their ability to outperform their schedule and cost guidance. In addition, they may lack confidence in their ability to manage non-fuel O&M costs, find opportunities to refocus smaller business lines, and meet short-term EPS growth guidance. Moreover, they may be concerned about increased wages for electricians and pipefitters, the productivity of newly-hired workers, and their capacity mix.
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.
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