On Tuesday, BofA Securities updated its outlook on Southern Co . (NYSE: NYSE:SO), increasing the price target to $73 from the previous $70 while maintaining a Neutral rating. The adjustment reflects a revision in earnings per share (EPS) estimates for the years 2024, 2025, and 2026, alongside expectations for the company's performance in the first quarter of 2024.
The firm has adjusted its EPS forecasts for Southern Co. to $4.00 for 2024, $4.30 for 2025, and $4.56 for 2026, which is a slight change from the previous estimates of $4.01, $4.27, and $4.52, respectively. These updated figures are in line with the consensus and the company's guidance for the upcoming quarter.
BofA Securities anticipates Southern Co. to report an EPS of 90 cents for the first quarter of 2024, which aligns with the consensus estimates. The revised price target of $73 indicates an increase in the relative premium to the peer 2026 estimated price-to-earnings (P/E) multiple for the utilities based in Georgia and Alabama.
The increase in the price target is attributed to a general de-risking following the completion of the Vogtle nuclear project and the supportive regulatory environments in the regions where Southern Co. operates. These factors are expected to contribute to the stability of the company's performance moving forward.
Southern Co., a leading energy company serving 9 million customers through its subsidiaries, is anticipated to benefit from these regulatory paradigms, which provide a stable backdrop for the company's growth and financial planning. The new price target reflects BofA Securities' assessment of these positive developments.
InvestingPro Insights
InvestingPro data shows a market capitalization of $80.25 billion for Southern Co., with a P/E ratio of 20.01, reflecting investor sentiment on the company's earnings potential. The company's revenue for the last twelve months as of Q4 2023 stands at $25.25 billion, though it's noteworthy that there was a revenue decline of 13.75% compared to the previous period. Despite this, the company's gross profit margin remains robust at 46.36%, indicating efficient management of production costs relative to revenue.
From an investment standpoint, Southern Co. has shown a solid return over the last week with a price total return of 7.69%, signaling positive short-term investor confidence. Moreover, the company is trading near its 52-week high, at 96.28% of the peak price, which could indicate a strong market belief in its stability and future prospects. With a dividend yield of 3.84%, the company remains an attractive option for income-focused investors, especially considering its track record of raising dividends for 22 consecutive years, as highlighted by InvestingPro Tips.
For those looking for more in-depth analysis and additional insights, InvestingPro offers a range of tips, including the fact that Southern Co. has maintained dividend payments for over half a century and that analysts are optimistic about its profitability this year. To access these insights and others, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at Investing.com. Note that there are 9 additional InvestingPro Tips available that could further inform investment decisions regarding Southern Co.
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