Southern Company (SO) has received a grant of $15 million from the government of U.S. The company will utilize the amount to upgrade the Alabama power plant. This facility is one of four projects that received about $67 million of federal funding.
As elucidated by the U.S. Department of Energy, the allowance will cover a part of the installation expense of a heat exchanger at Plant Barry in Alabama. The improved coal-fired power plant is expected to minimize the harsh effects of greenhouse gas emissions and correspondingly, global warming.
Headquartered in Atlanta, Georgia, Southern Company is a leading generator of electricity in the nation, serving both regulated and competitive markets across the southeastern region. It is a holding company for four regulated Southern electric utilities that serve about 4.4 million customers –– Georgia Power, Alabama Power, Gulf Power, and Mississippi Power.
In the recently completed second quarter, Southern Company performed impressively with earnings per share of 71 cents breezing past the Zacks Consensus Estimate of 64 cents and the year-ago period profit of 62 cents. Quarterly revenue, at $4,521 million, was up 7.5% year over year and $59 million ahead of the Zacks Consensus.
The company’s activities were driven by the positive effects of weather-related gains, robust industrial sector growth, and regulatory actions in Georgia.
Supported by good rate base growth and long-term power contracts, we believe that Southern Company will be able to generate steady earnings and dividend growth in the coming years. Additionally, the company’s strength in power plant productivity, cost control and new technology research adds to our positive sentiment.
However, the challenging economic environment and a return to more normal spending levels may hamper Southern’s results in the next few quarters. The company also faces stiff competition from peers such as NextEra Energy (NEE) and Exelon Corp. (EXC). Hence, we are maintaining our long-term Neutral recommendation on the stock.
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