Intrinsic value of Southern - SO

Previous Close

$44.44

  Intrinsic Value

$31.05

stock screener

  Rating & Target

sell

-30%

Previous close

$44.44

 
Intrinsic value

$31.05

 
Up/down potential

-30%

 
Rating

sell

We calculate the intrinsic value of SO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.76
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  19,454
  20,294
  20,761
  21,294
  21,893
  22,557
  23,285
  24,078
  24,937
  25,861
  26,854
  27,916
  29,049
  30,255
  31,537
  32,898
  34,339
  35,865
  37,479
  39,184
  40,985
  42,884
  44,888
  47,000
  49,225
  51,568
  54,035
  56,632
  59,365
  62,240
  65,264
Variable operating expenses, $m
 
  15,309
  15,647
  16,033
  16,467
  16,947
  17,474
  18,048
  18,669
  19,338
  20,056
  20,199
  21,019
  21,892
  22,820
  23,804
  24,847
  25,951
  27,119
  28,353
  29,656
  31,030
  32,480
  34,008
  35,618
  37,314
  39,099
  40,978
  42,956
  45,036
  47,224
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  15,267
  15,309
  15,647
  16,033
  16,467
  16,947
  17,474
  18,048
  18,669
  19,338
  20,056
  20,199
  21,019
  21,892
  22,820
  23,804
  24,847
  25,951
  27,119
  28,353
  29,656
  31,030
  32,480
  34,008
  35,618
  37,314
  39,099
  40,978
  42,956
  45,036
  47,224
Operating income, $m
  4,629
  4,985
  5,114
  5,261
  5,427
  5,610
  5,811
  6,031
  6,268
  6,523
  6,798
  7,716
  8,030
  8,363
  8,717
  9,093
  9,492
  9,914
  10,360
  10,831
  11,329
  11,854
  12,408
  12,992
  13,607
  14,254
  14,936
  15,654
  16,410
  17,204
  18,040
EBITDA, $m
  7,552
  7,582
  7,757
  7,956
  8,180
  8,428
  8,700
  8,996
  9,317
  9,662
  10,033
  10,430
  10,853
  11,304
  11,783
  12,291
  12,830
  13,400
  14,003
  14,640
  15,313
  16,022
  16,771
  17,560
  18,391
  19,267
  20,189
  21,159
  22,180
  23,254
  24,384
Interest expense (income), $m
  1,100
  1,592
  1,643
  1,710
  1,787
  1,874
  1,970
  2,075
  2,189
  2,313
  2,447
  2,590
  2,743
  2,907
  3,081
  3,266
  3,462
  3,670
  3,891
  4,124
  4,370
  4,630
  4,904
  5,193
  5,498
  5,819
  6,158
  6,514
  6,889
  7,283
  7,698
Earnings before tax, $m
  3,480
  3,393
  3,471
  3,551
  3,639
  3,736
  3,842
  3,956
  4,079
  4,210
  4,351
  5,126
  5,286
  5,456
  5,636
  5,827
  6,030
  6,243
  6,469
  6,708
  6,959
  7,224
  7,504
  7,798
  8,109
  8,435
  8,779
  9,141
  9,521
  9,921
  10,342
Tax expense, $m
  951
  916
  937
  959
  983
  1,009
  1,037
  1,068
  1,101
  1,137
  1,175
  1,384
  1,427
  1,473
  1,522
  1,573
  1,628
  1,686
  1,747
  1,811
  1,879
  1,951
  2,026
  2,106
  2,189
  2,277
  2,370
  2,468
  2,571
  2,679
  2,792
Net income, $m
  2,493
  2,477
  2,533
  2,592
  2,657
  2,727
  2,804
  2,888
  2,977
  3,073
  3,176
  3,742
  3,859
  3,983
  4,115
  4,254
  4,402
  4,558
  4,722
  4,896
  5,080
  5,274
  5,478
  5,693
  5,919
  6,158
  6,409
  6,673
  6,950
  7,243
  7,550

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,975
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  109,697
  109,697
  112,220
  115,104
  118,342
  121,930
  125,866
  130,153
  134,793
  139,792
  145,157
  150,896
  157,020
  163,541
  170,471
  177,824
  185,617
  193,866
  202,590
  211,807
  221,539
  231,808
  242,637
  254,052
  266,079
  278,747
  292,084
  306,122
  320,894
  336,435
  352,781
Adjusted assets (=assets-cash), $m
  107,722
  109,697
  112,220
  115,104
  118,342
  121,930
  125,866
  130,153
  134,793
  139,792
  145,157
  150,896
  157,020
  163,541
  170,471
  177,824
  185,617
  193,866
  202,590
  211,807
  221,539
  231,808
  242,637
  254,052
  266,079
  278,747
  292,084
  306,122
  320,894
  336,435
  352,781
Revenue / Adjusted assets
  0.181
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
Average production assets, $m
  9,673
  9,863
  10,090
  10,349
  10,640
  10,963
  11,317
  11,702
  12,119
  12,569
  13,051
  13,567
  14,118
  14,704
  15,327
  15,988
  16,689
  17,431
  18,215
  19,044
  19,919
  20,842
  21,816
  22,842
  23,923
  25,062
  26,261
  27,523
  28,852
  30,249
  31,719
Working capital, $m
  -3,195
  -345
  -353
  -362
  -372
  -383
  -396
  -409
  -424
  -440
  -457
  -475
  -494
  -514
  -536
  -559
  -584
  -610
  -637
  -666
  -697
  -729
  -763
  -799
  -837
  -877
  -919
  -963
  -1,009
  -1,058
  -1,109
Total debt, $m
  47,457
  46,944
  48,869
  51,069
  53,540
  56,277
  59,281
  62,552
  66,092
  69,906
  73,999
  78,379
  83,051
  88,027
  93,314
  98,925
  104,871
  111,165
  117,821
  124,854
  132,279
  140,114
  148,377
  157,087
  166,264
  175,929
  186,105
  196,816
  208,087
  219,945
  232,417
Total liabilities, $m
  84,212
  83,699
  85,624
  87,824
  90,295
  93,032
  96,036
  99,307
  102,847
  106,661
  110,754
  115,134
  119,806
  124,782
  130,069
  135,680
  141,626
  147,920
  154,576
  161,609
  169,034
  176,869
  185,132
  193,842
  203,019
  212,684
  222,860
  233,571
  244,842
  256,700
  269,172
Total equity, $m
  25,485
  25,998
  26,596
  27,280
  28,047
  28,897
  29,830
  30,846
  31,946
  33,131
  34,402
  35,762
  37,214
  38,759
  40,402
  42,144
  43,991
  45,946
  48,014
  50,198
  52,505
  54,938
  57,505
  60,210
  63,061
  66,063
  69,224
  72,551
  76,052
  79,735
  83,609
Total liabilities and equity, $m
  109,697
  109,697
  112,220
  115,104
  118,342
  121,929
  125,866
  130,153
  134,793
  139,792
  145,156
  150,896
  157,020
  163,541
  170,471
  177,824
  185,617
  193,866
  202,590
  211,807
  221,539
  231,807
  242,637
  254,052
  266,080
  278,747
  292,084
  306,122
  320,894
  336,435
  352,781
Debt-to-equity ratio
  1.862
  1.810
  1.840
  1.870
  1.910
  1.950
  1.990
  2.030
  2.070
  2.110
  2.150
  2.190
  2.230
  2.270
  2.310
  2.350
  2.380
  2.420
  2.450
  2.490
  2.520
  2.550
  2.580
  2.610
  2.640
  2.660
  2.690
  2.710
  2.740
  2.760
  2.780
Adjusted equity ratio
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237
  0.237

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,493
  2,477
  2,533
  2,592
  2,657
  2,727
  2,804
  2,888
  2,977
  3,073
  3,176
  3,742
  3,859
  3,983
  4,115
  4,254
  4,402
  4,558
  4,722
  4,896
  5,080
  5,274
  5,478
  5,693
  5,919
  6,158
  6,409
  6,673
  6,950
  7,243
  7,550
Depreciation, amort., depletion, $m
  2,923
  2,598
  2,643
  2,695
  2,753
  2,818
  2,888
  2,966
  3,049
  3,139
  3,235
  2,713
  2,824
  2,941
  3,065
  3,198
  3,338
  3,486
  3,643
  3,809
  3,984
  4,168
  4,363
  4,568
  4,785
  5,012
  5,252
  5,505
  5,770
  6,050
  6,344
Funds from operations, $m
  5,772
  5,074
  5,177
  5,287
  5,410
  5,545
  5,693
  5,853
  6,026
  6,212
  6,412
  6,456
  6,683
  6,924
  7,180
  7,452
  7,739
  8,044
  8,365
  8,705
  9,064
  9,442
  9,841
  10,261
  10,704
  11,170
  11,661
  12,177
  12,721
  13,292
  13,894
Change in working capital, $m
  878
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
Cash from operations, $m
  4,894
  5,081
  5,184
  5,296
  5,420
  5,556
  5,705
  5,867
  6,041
  6,228
  6,428
  6,474
  6,702
  6,944
  7,202
  7,475
  7,764
  8,070
  8,393
  8,734
  9,094
  9,474
  9,875
  10,297
  10,742
  11,210
  11,703
  12,221
  12,767
  13,341
  13,945
Maintenance CAPEX, $m
  0
  -1,935
  -1,973
  -2,018
  -2,070
  -2,128
  -2,193
  -2,263
  -2,340
  -2,424
  -2,514
  -2,610
  -2,713
  -2,824
  -2,941
  -3,065
  -3,198
  -3,338
  -3,486
  -3,643
  -3,809
  -3,984
  -4,168
  -4,363
  -4,568
  -4,785
  -5,012
  -5,252
  -5,505
  -5,770
  -6,050
New CAPEX, $m
  -7,310
  -190
  -227
  -259
  -291
  -323
  -354
  -385
  -417
  -449
  -482
  -516
  -551
  -586
  -623
  -661
  -701
  -742
  -784
  -829
  -875
  -923
  -974
  -1,026
  -1,081
  -1,139
  -1,199
  -1,262
  -1,328
  -1,397
  -1,470
Cash from investing activities, $m
  -20,048
  -2,125
  -2,200
  -2,277
  -2,361
  -2,451
  -2,547
  -2,648
  -2,757
  -2,873
  -2,996
  -3,126
  -3,264
  -3,410
  -3,564
  -3,726
  -3,899
  -4,080
  -4,270
  -4,472
  -4,684
  -4,907
  -5,142
  -5,389
  -5,649
  -5,924
  -6,211
  -6,514
  -6,833
  -7,167
  -7,520
Free cash flow, $m
  -15,154
  2,957
  2,985
  3,019
  3,059
  3,106
  3,159
  3,218
  3,283
  3,355
  3,432
  3,348
  3,438
  3,535
  3,638
  3,748
  3,866
  3,990
  4,122
  4,262
  4,411
  4,567
  4,733
  4,908
  5,092
  5,286
  5,491
  5,707
  5,934
  6,174
  6,425
Issuance/(repayment) of debt, $m
  13,973
  1,462
  1,925
  2,201
  2,470
  2,737
  3,004
  3,271
  3,540
  3,814
  4,093
  4,379
  4,673
  4,975
  5,288
  5,611
  5,946
  6,294
  6,656
  7,033
  7,426
  7,835
  8,263
  8,710
  9,177
  9,665
  10,176
  10,711
  11,271
  11,858
  12,472
Issuance/(repurchase) of shares, $m
  3,758
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  17,829
  1,462
  1,925
  2,201
  2,470
  2,737
  3,004
  3,271
  3,540
  3,814
  4,093
  4,379
  4,673
  4,975
  5,288
  5,611
  5,946
  6,294
  6,656
  7,033
  7,426
  7,835
  8,263
  8,710
  9,177
  9,665
  10,176
  10,711
  11,271
  11,858
  12,472
Total cash flow (excl. dividends), $m
  2,675
  4,418
  4,910
  5,219
  5,529
  5,843
  6,162
  6,489
  6,824
  7,169
  7,526
  7,727
  8,111
  8,510
  8,926
  9,359
  9,812
  10,284
  10,778
  11,295
  11,836
  12,403
  12,996
  13,617
  14,269
  14,951
  15,667
  16,418
  17,205
  18,031
  18,898
Retained Cash Flow (-), $m
  -4,166
  -513
  -598
  -684
  -767
  -850
  -933
  -1,016
  -1,100
  -1,185
  -1,271
  -1,360
  -1,451
  -1,545
  -1,642
  -1,743
  -1,847
  -1,955
  -2,067
  -2,184
  -2,306
  -2,434
  -2,567
  -2,705
  -2,850
  -3,002
  -3,161
  -3,327
  -3,501
  -3,683
  -3,874
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,905
  4,312
  4,536
  4,762
  4,993
  5,229
  5,473
  5,724
  5,984
  6,254
  6,366
  6,659
  6,964
  7,283
  7,616
  7,965
  8,329
  8,711
  9,111
  9,530
  9,969
  10,429
  10,912
  11,418
  11,949
  12,506
  13,091
  13,704
  14,348
  15,024
Discount rate, %
 
  10.20
  10.71
  11.25
  11.81
  12.40
  13.02
  13.67
  14.35
  15.07
  15.82
  16.61
  17.45
  18.32
  19.23
  20.20
  21.21
  22.27
  23.38
  24.55
  25.77
  27.06
  28.42
  29.84
  31.33
  32.90
  34.54
  36.27
  38.08
  39.99
  41.98
PV of cash for distribution, $m
 
  3,544
  3,518
  3,295
  3,047
  2,783
  2,509
  2,232
  1,958
  1,692
  1,439
  1,174
  967
  782
  620
  482
  367
  273
  198
  141
  97
  65
  43
  27
  16
  10
  6
  3
  2
  1
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Southern Company (Southern Company) is a holding company. The Company owns all of the stock of the traditional electric operating companies and the parent entities of Southern Power Company (Southern Power) and Southern Company Gas, and owns other direct and indirect subsidiaries. The Company's segments include Gas distribution operations, Gas marketing services, Wholesale gas services, Gas midstream operations and All other. The Gas distribution operations segment includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. The Gas marketing services segment provides natural gas commodity and related services to customers markets that provide for customer choice. The Wholesale gas services segment engages in natural gas storage and gas pipeline arbitrage. The Gas midstream operations consist primarily of gas pipeline investments, with storage and fuels.

FINANCIAL RATIOS  of  Southern (SO)

Valuation Ratios
P/E Ratio 17.7
Price to Sales 2.2
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 9
Price to Free Cash Flow -18.2
Growth Rates
Sales Growth Rate 13.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.1%
Cap. Spend. - 3 Yr. Gr. Rate 6%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 167.3%
Total Debt to Equity 186.2%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 4.1%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 10.7%
Return On Equity - 3 Yr. Avg. 10.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 37.7%
EBITDA Margin - 3 Yr. Avg. 36.5%
Operating Margin 23.3%
Oper. Margin - 3 Yr. Avg. 22.5%
Pre-Tax Margin 17.5%
Pre-Tax Margin - 3 Yr. Avg. 18.2%
Net Profit Margin 12.5%
Net Profit Margin - 3 Yr. Avg. 12.5%
Effective Tax Rate 27.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.9%
Payout Ratio 84.4%

SO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SO stock intrinsic value calculation we used $19896 million for the last fiscal year's total revenue generated by Southern. The default revenue input number comes from 2016 income statement of Southern. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SO stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.2%, whose default value for SO is calculated based on our internal credit rating of Southern, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Southern.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SO stock the variable cost ratio is equal to 75.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Southern.

Corporate tax rate of 27% is the nominal tax rate for Southern. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SO are equal to 48.6%.

Life of production assets of 4.4 years is the average useful life of capital assets used in Southern operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SO is equal to -1.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $25485 million for Southern - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1007.69 million for Southern is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Southern at the current share price and the inputted number of shares is $44.8 billion.

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SCG Scana 43.35 54.87  buy
EIX Edison Interna 62.12 52.70  hold
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AEP American Elect 67.76 45.59  sell

COMPANY NEWS

▶ Southern Company announces quarterly dividend   [Jan-19-18 02:35PM  PR Newswire]
▶ Where NextEra Energy Stock Could Go from Here   [07:34AM  Market Realist]
▶ How Does Southern Companys Dividend Profile Look?   [Jan-18-18 04:05PM  Market Realist]
▶ 52-Week Company Lows   [10:58AM  GuruFocus.com]
▶ Which Utility Is the Best Dividend Stock?   [Jan-16-18 02:14PM  Motley Fool]
▶ Dominion Energy Has a Better Dividend Profile than Sempra   [Jan-15-18 10:32AM  Market Realist]
▶ State Sen. Chuck Hufstelter questions financial plan for Plant Vogtle   [02:40PM  American City Business Journals]
▶ Alabama Power Dividends Declared   [10:57AM  PR Newswire]
▶ Which Top Utility Offers the Highest Dividend Growth?   [Jan-11-18 03:10PM  Market Realist]
▶ /C O R R E C T I O N -- Georgia Power/   [Jan-10-18 09:51PM  PR Newswire]
▶ Project SHARE makes helping neighbors easy this winter   [Jan-04-18 04:12PM  PR Newswire]
▶ How US Utility Stocks Are Valued for the New Year   [Jan-02-18 11:55AM  Market Realist]
▶ A Closer Look at Top Utilities Earnings Profiles   [Dec-29-17 02:00PM  Market Realist]
▶ Analyzing the Top Utilities: NEE, DUK, SO, and D   [Dec-27-17 09:01AM  Market Realist]
▶ Utilities Sail through Rough Seas and Markets Rise   [Dec-26-17 08:54AM  Market Realist]
▶ Regulators Rescue Troubled Vogtle Nuclear Plant   [Dec-23-17 11:00AM  Oilprice.com]
▶ Major concrete placement completed for Vogtle Unit 4   [Dec-22-17 01:39PM  PR Newswire]
▶ Troubled $25 billion nuclear project gets OK to continue   [Dec-21-17 01:42PM  Associated Press]
▶ Southern Companys Price Targets and Wall Streets Views   [Dec-20-17 04:15PM  Market Realist]
▶ Whats Next for Southern Company Stock?   [02:45PM  Market Realist]
▶ AESs Price Targets and Analysts Views   [Dec-18-17 09:02AM  Market Realist]
▶ How Southern Company Stock Is Valued Currently   [Dec-14-17 02:31PM  Market Realist]
▶ How Utilities Are Performing Compared to Broader Markets   [Dec-11-17 04:24PM  Market Realist]
▶ Power restored to 295,000 customers as of Saturday night   [Dec-09-17 11:18PM  PR Newswire]
▶ Analyzing Top Utilities Target Prices   [12:15PM  Market Realist]
Financial statements of SO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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