Southern Company’s Current Valuation in Context
Among the top S&P 500 utilities stocks, Southern Company (SO) looks to be trading at a relatively fair valuation. It’s currently trading at an EV-to-EBITDA1 valuation of $10.4x against its five-year historical valuation of around 11x. Broader utilities are currently trading at an average valuation multiple of 10.5x. SO stock looks to be trading at an attractive valuation compared to its historical average as well as the industry average.
Interested in NEE? Don't miss the next report.
Receive e-mail alerts for new research on NEE
US utilities have become fairly cheap in the last few months compared to November 2017. However, US utilities still appear to be trading at a premium to their historical averages. Currently, US utilities (XLU) are trading at an EV-to-EBITDA valuation multiple of 10.4x—compared to their five-year valuation average of ~9x.
Top utilities NextEra Energy (NEE) and Dominion Energy (D) are trading at 14x and 13.5x—higher than their historical EV-to-EBITDA valuations.
Read about utilities’ recent performance and what could drive them going forward in Market Realist’s series Weekly Review: What’s in Store for Utilities?
- Enterprise value to earnings before interest, tax, depreciation, and amortization ↩