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Southern Third Quarter Earnings Preview
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Southern (NYSE:SO) will announce its third quarter earnings on Wednesday, October 31, 2012.
Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: Can Earnings Guidance Accurately Predict The Future?
What to Expect: Analysts are expecting Southern to report earnings of $1.14 per share, up 6.5% from a year ago, when the company reported earnings of $1.07 per share.
Analysts are expecting earnings of $2.65 per share for the fiscal year.
Southern is expected to beat last year's reported revenue of $5.43 billion and come in at $5.97 billion for the quarter. Revenue of $18.02 billion is expected for the fiscal year.
Company Performance: Over the last three quarters, revenue has dropped. It dropped 7.5% to $4.18 billion in second quarter. Prior to that, the figure declined 10.2% in the first quarter and 2% in the fourth quarter of the last fiscal year.
The company has been profitable for the last eight quarters; profit has risen year-over-year by an average of 16.5% over the most recent four quarters.
SO's P/E ratio of 18.6 is above the industry average of 13.08. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Understanding The P/E Ratio
The stock price has fallen 4.3% to $46.23 from $48.33 since July 30, 2012. Southern's best recent streak was when its price gained $1.15 per share between October 15, 2012 and October 18, 2012.
The Competition: Southern Company, through its operating companies, provides electric service in four Southeastern states. Analysts generally consider Southern a hold, with 13 of 16 analysts rating it as such. The rating has remained unchanged for the past three months.
The company's closest competitor in the electric utilities industry is Duke Energy (DUK). Analysts are less optimistic about Southern than about Duke Energy. Three out of 17 analysts rate the latter a buy compared to one of 16 for the former.
Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: Can Earnings Guidance Accurately Predict The Future?
What to Expect: Analysts are expecting Southern to report earnings of $1.14 per share, up 6.5% from a year ago, when the company reported earnings of $1.07 per share.
Analysts are expecting earnings of $2.65 per share for the fiscal year.
Southern is expected to beat last year's reported revenue of $5.43 billion and come in at $5.97 billion for the quarter. Revenue of $18.02 billion is expected for the fiscal year.
Company Performance: Over the last three quarters, revenue has dropped. It dropped 7.5% to $4.18 billion in second quarter. Prior to that, the figure declined 10.2% in the first quarter and 2% in the fourth quarter of the last fiscal year.
SO's P/E ratio of 18.6 is above the industry average of 13.08. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Understanding The P/E Ratio
The stock price has fallen 4.3% to $46.23 from $48.33 since July 30, 2012. Southern's best recent streak was when its price gained $1.15 per share between October 15, 2012 and October 18, 2012.
The Competition: Southern Company, through its operating companies, provides electric service in four Southeastern states. Analysts generally consider Southern a hold, with 13 of 16 analysts rating it as such. The rating has remained unchanged for the past three months.
The company's closest competitor in the electric utilities industry is Duke Energy (DUK). Analysts are less optimistic about Southern than about Duke Energy. Three out of 17 analysts rate the latter a buy compared to one of 16 for the former.
by
Investopedia Staff
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