Southern Company (SO) Q4 Earnings Disappoint, Revenues Beat

Power supplier Southern CompanySO reported fourth-quarter 2016 earnings per share (excluding certain one-time items) of 24 cents, below the Zacks Consensus Estimate of 31 cents and the year-ago adjusted profit of 44 cents.

The weak numbers can be attributed to increased operations and maintenance costs.

The Atlanta-based utility's quarterly revenue - at $5,181 million - came 45% higher than the fourth-quarter 2015 level of $3,568 million and was also ahead of the Zacks Consensus Estimate of $4,582.6 million amid robust performance from its wholesale unit and favorable weather impact.

Overall Sales Breakup

While wholesale sales jumped 31.1%, Southern Company's retail electricity demand also increased amid favorable weather conditions. This brought about an upward movement in overall electricity sales and usage. In fact, total electricity sales during the fourth quarter was up 6.2% from the same period last year.

Southern Company's total retail sales rose 1.7%, with residential and commercial sales were up by 8.7% and 0.5%, respectively. However, demand from industrial customers fell 2.4% from the year-ago period.

Southern Company (The) Price, Consensus and EPS Surprise

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

Expenses Summary

Southern Company's operations and maintenance cost increased 48% to $1,624 million, while the utility's total operating expense for the period - at $4,594 million - was up 54% 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 Corp. EXC and Duke Energy Corp. DUK - currently retains a Zacks Rank #3 (Hold).

A better-ranked player from the same industry would be Fortis Inc. FTS . This Zacks Rank #1 (Strong Buy) stock offers excellent value and is worth buying now. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Incorporated in 1987, Fortis is a regulated electric and natural gas utility with operations spread all over North America. The Canada-based utility's expected EPS growth rate for 3 to 5 years currently stands at 6% -- comparing favorably with the industry growth rate of 5.20%.

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Exelon Corporation (EXC): Free Stock Analysis Report

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Duke Energy Corporation (DUK): Free Stock Analysis Report

Fortis Inc. (FTS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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