Southern Co Stock Buy Recommendation Reiterated (SO)

NEW YORK (TheStreet) -- Southern (NYSE:SO) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its expanding profit margins, growth in earnings per share, solid stock price performance and increase in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

• ACTIVE STOCK TRADERS: Check out TheStreet's special offer for Real Money, headlined by Jim Cramer, now!

Highlights from the ratings report include:

• 37.50% is the gross profit margin for SOUTHERN CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.30% is above that of the industry average.
• SOUTHERN CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SOUTHERN CO increased its bottom line by earning $2.55 versus $2.36 in the prior year. This year, the market expects an improvement in earnings ($2.65 versus $2.55).
• The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
• SO, with its decline in revenue, slightly underperformed the industry average of 1.2%. Since the same quarter one year prior, revenues slightly dropped by 7.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
• The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Electric Utilities industry average. The net income increased by 3.1% when compared to the same quarter one year prior, going from $620.00 million to $639.00 million.

The Southern Company operates as an electric utility company. It is involved in the generation, transmission, and distribution of electricity through coal, nuclear, oil and gas, and hydro resources. The company has a P/E ratio of 18.9, below the average utilities industry P/E ratio of 19and above the S&P 500 P/E ratio of 17.7. Southern has a market cap of $41.24 billion and is part of the utilities sector and utilities industry. Shares are up 1.8% year to date as of the close of trading on Wednesday.

You can view the full Southern Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

For more information on Southern Co click any of the following:

• Southern Co Stock Price

• Southern Co Analyst Ratings

• Southern Co Key Stats & Profile

• Southern Co Earnings

• Southern Co Ratio Comparison

• Southern Co Growth Rates

• Southern Co Balance Sheet

• Southern Co Cash Flow

• Southern Co Income Statement