Editor's Note: 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.
NEW YORK (
) 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 increase in net income, expanding profit margins, growth in earnings per share, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Electric Utilities industry average. The net income increased by 6.4% when compared to the same quarter one year prior, going from $933.00 million to $993.00 million.
- 43.40% 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 19.70% 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 ($2.63 versus $2.55).
- Net operating cash flow has slightly increased to $2,287.00 million or 3.53% when compared to the same quarter last year. Despite an increase in cash flow, SOUTHERN CO's average is still marginally south of the industry average growth rate of 6.12%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, SOUTHERN CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
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. Southern has a market cap of $37.39 billion and is part of the utilities sector and utilities industry. The company has a P/E ratio of 16.8, below the S&P 500 P/E ratio of 17.7. Shares are down 8.3% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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