SO - Embedded Expectations Analysis - 2021 10 28
The Southern Company (SO:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 34.4x Uniform P/E, implying somewhat bullish expectations for the firm. However, management may be concerned about fuel load productivity, industrial and commercial sales declines, and their execution on projections and milestones.Specifically, management may be concerned about Unit 4 fuel load productivity, the review of ITAAC licenses submitted to the Nuclear Regulatory Commission (NRC), and potential cyber or physical infrastructure attacks. In addition, they may be concerned about a decline in industrial and commercial sales, and they may lack confidence in their ability to meet fuel load projections and milestones integrating plants with non-nuclear heat sources. Furthermore, they may also lack confidence in their ability to progress through the next milestones for Unit 4, sustain Southern Company Gas' annual in-rate base growth, and maintain aggregate retail sales recovery.
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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