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Southern Company’s 4Q17 Earnings: What You Need to Know

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Southern Company’s 4Q17 Earnings: What You Need to Know PART 2 OF 5

How Power Plants Could Impact Southern Company’s 4Q17 Earnings

Earnings

According to management, Southern Company (SO) is expected to report earnings of $0.46 per share for the quarter that ended on December 31, 2017. For the same quarter in 2016, it earned $0.24 per share.

For fiscal 2017, Southern Company is expected to report earnings of $2.97 per share against its earnings of $2.84 per share in 2016, which indicates a year-over-year increase of about 4.5% in earnings, in line with the industry average.

How Power Plants Could Impact Southern Company’s 4Q17 Earnings

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Earnings drivers

Southern Company’s Mississippi-based Kemper County power plant reported more than a $3.1 billion loss in the nine months ended on September 30, 2017. It should be interesting to see how Kemper fares this quarter. In June 2017, Mississippi regulators prohibited Southern Company’s plan from passing on the additional costs involved in converting the plant to run wholly on gas to ratepayers.

Southern Company is the fourth-largest utility in the country by market capitalization. Its market performance largely trended downward last year on its power plant concerns. Plant Vogtle reactors are estimated to cost $25 billion and are expected to complete by 2021 and 2022.

In the last year, Southern Company stock has corrected nearly 10% while broader utilities (XLU)(VPU)(IDU) have lost about 1%.

Southern Company has given an earnings guidance range of $2.9 to $3.02 per share for full-year 2017. It aims to grow its earnings per share 4%–6% per year for the next few years. Southern Company’s dividends are expected to follow its earnings growth for the next few years.

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