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How Do Southern Company’s Valuations and Ratings Look?

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How Do Southern Company’s Valuations and Ratings Look? PART 1 OF 4

What Southern Company’s Chart Indicators and Short Interest Mean

Moving averages

Utilities have had a lackluster run so far this year. The faster-than-expected pace of interest rate hikes could continue to weigh on these defensives going forward. Tensions in the broader markets due to trade war fears also couldn’t notably uplift utility stocks recently. Broader utilities (XLU) are down almost 5% year-to-date and regulated giant Southern Company (SO), one of the laggards among top utilities, has fallen more than 8% in this period. In comparison, top utility stock NextEra Energy (NEE) has soared 3%, while peer Duke Energy (DUK) has plunged 8% year-to-date.

Georgia-based Southern Company stock continues to look weak going forward. It’s currently trading marginally lower than its 50-day moving average and 8% below its 200-day moving average levels. SO trading below both of its key moving average levels might concern investors. Its 50-day moving average level around $44.0 will likely act as a resistance for SO in the short term. It closed at $43.8 on April 12, 2018.

What Southern Company’s Chart Indicators and Short Interest Mean

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Relative strength index

Southern Company stock is trading at an RSI (relative strength index) of 38. RSI values above 70 are considered to be in the “overbought” zone, while values below 30 are considered to be in the “oversold” zone. An RSI score at either extreme suggests an imminent reversal in the stock’s direction.

Short interest

Short interest in Southern Company stock increased 3% on March 29, 2018. On March 15, total shorted shares in SO were 33.3 million. They rose to 34.4 million on March 29. An increase in short interest could mean that more investors are expecting the stock to fall from its current price levels.

Short interest is the number of shares sold short and not yet squared off. Short interest measures investors’ anxiety.

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