MMarketMath

SO

StalwartQuality: Medium (48/100)2 red flags

Southern Company · Utilities · Electric Utilities

$90.10

52w 83.80 – 100.84

20y monthly, adjusted

Mkt cap

$101.6B

P/E

23.4

P/FCF

—

FCF yield

-2.9%

ROE

12.1%

Shldr yield

3.0%

div 3.0% + bb 0.0%

Historical multiple lens

At its own median P/OCF of 5.0× across 19 years, SO would trade near $44/share (25th–75th percentile: $34–$79); it trades at 10.4× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+0.3%

Rev 5y

+7.7%

Rev 10y

+5.4%

EPS 5y

+6.0%

EPS 10y

+4.2%

FCF 5y

—

FCF 10y

—

Fundamentals

Fiscal 2007–2025, from SEC filings

Revenue

2007: $15.4B
2008: $17.1B
2009: $15.7B
2010: $17.5B
2011: $17.7B
2012: $16.5B
2013: $17.1B
2014: $18.5B
2015: $17.5B
2016: $19.9B
2017: $23.0B
2018: $23.5B
2019: $21.4B
2020: $20.4B
2021: $23.1B
2022: $29.3B
2023: $25.3B
2024: $26.7B
2025: $29.6B
$0$10.0B$20.0B
07
11
15
19
23

Net income

2007: $1.8B
2008: $1.8B
2009: $1.7B
2010: $2.0B
2011: $2.3B
2012: $2.4B
2013: $1.7B
2014: $2.0B
2015: $2.4B
2016: $2.5B
2017: $926.0M
2018: $2.3B
2019: $4.7B
2020: $3.1B
2021: $2.3B
2022: $3.4B
2023: $4.0B
2024: $4.4B
2025: $4.3B
$0$2.0B$4.0B
07
11
15
19
23

Free cash flow

2007: −$112.0M
2008: −$497.0M
2009: −$1.4B
2010: −$95.0M
2011: $1.4B
2012: $89.0M
2013: $766.0M
2014: $569.0M
2015: $600.0M
2016: −$2.4B
2017: −$1.0B
2018: −$1.1B
2019: −$1.8B
2020: −$826.0M
2021: −$1.4B
2022: −$1.6B
2023: −$1.5B
2024: $833.0M
2025: −$2.9B
−$2.0B$0
07
11
15
19
23

Diluted shares (lower is better)

2007: 761.0M
2008: 775.0M
2009: 796.0M
2010: 837.0M
2011: 864.0M
2012: 879.0M
2013: 881.0M
2014: 901.0M
2015: 914.0M
2016: 958.0M
2017: 1.0B
2018: 1.0B
2019: 1.1B
2020: 1.1B
2021: 1.1B
2022: 1.1B
2023: 1.1B
2024: 1.1B
2025: 1.1B
0500.0M1.0B
07
11
15
19
23

Margins

-10%0%10%20%07101316192225
Net marginFCF marginGross margin

Capital returned (dividends + buybacks)

2007: $1.2B
2008: $1.3B
2009: $1.4B
2010: $1.5B
2011: $1.6B
2012: $2.1B
2013: $1.8B
2014: $1.9B
2015: $2.1B
2016: $2.1B
2017: $2.3B
2018: $2.4B
2019: $2.6B
2020: $2.7B
2021: $2.8B
2022: $2.9B
2023: $3.0B
2024: $3.0B
2025: $3.0B
$0$1.0B$2.0B$3.0B
07
11
15
19
23

Cash vs long-term debt

$0$20.0B$40.0B$60.0B07101316192225
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q1'23: $6.5B
Q2'23: $5.7B
Q3'23: $7.0B
Q4'23: $6.0B
Q1'24: $6.6B
Q2'24: $6.5B
Q3'24: $7.3B
Q4'24: $6.3B
Q1'25: $7.8B
Q2'25: $7.0B
Q3'25: $7.8B
Q4'25: $7.0B
Q1'26: $8.4B
$0$2.5B$5.0B$7.5B
23
23
24
25
26

Net income by quarter

Q1'23: $799.0M
Q2'23: $823.0M
Q3'23: $1.4B
Q4'23: $922.0M
Q1'24: $1.1B
Q2'24: $1.2B
Q3'24: $1.5B
Q4'24: $592.0M
Q1'25: $1.3B
Q2'25: $880.0M
Q3'25: $1.7B
Q4'25: $416.0M
Q1'26: $1.4B
$0$500.0M$1.0B$1.5B
23
23
24
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q1'26$8.4B+8.0%$1.4B+1.6%1.20$1.2B
Q4'25 *$7.0B+10.1%$416.0M−29.7%0.38$2.6B
Q3'25$7.8B+7.5%$1.7B+11.5%1.54$3.8B
Q2'25$7.0B+7.9%$880.0M−26.8%0.79$2.2B
Q1'25$7.8B+17.0%$1.3B+24.6%1.21$1.3B
Q4'24 *$6.3B+4.9%$592.0M−35.8%0.48$2.2B
Q3'24$7.3B+4.2%$1.5B+7.2%1.39$3.6B
Q2'24$6.5B+12.4%$1.2B+46.2%1.09$2.7B
Q1'24$6.6B+2.6%$1.1B+34.0%1.03$1.3B
Q4'23 *$6.0B−14.2%$922.0M—0.78$1.8B
Q3'23$7.0B−16.7%$1.4B−2.7%1.29$2.8B
Q2'23$5.7B−20.2%$823.0M−25.7%0.76$2.1B
Q1'23$6.5B−2.5%$799.0M−19.4%0.79$844.0M

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+0.3%+7.7%+5.4%+3.6%
Operating cash flow+15.9%+7.9%+4.6%+6.2%
Free cash flow+3.7%+3.7%+3.9%—
EPS (diluted)+6.3%+6.0%+4.2%+3.4%
Equity+5.8%+5.2%+5.7%+5.2%
LT debt+9.0%+7.8%+10.3%+8.9%
Diluted shares+0.9%+0.8%+2.0%+1.9%
Stock price+13.5%+10.3%+10.1%+9.8%

$100, 3 years ago

$146vs $176 in SPY

13.5% vs 20.7%/yr

$100, 5 years ago

$163vs $181 in SPY

10.3% vs 12.6%/yr

$100, 10 years ago

$263vs $412 in SPY

10.1% vs 15.2%/yr

$100, 15 years ago

$409vs $813 in SPY

9.8% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$12.31

$46.4B created / $3.8B retained

Last 10 years

$12.97

$68.6B created / $5.3B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

9.6%

OCF ÷ (equity + debt)

OCF / EV yield

5.9%

MC vs 10× OCF

1.04

≤1 = priced under 10× OCF

Debt / FCF

—

SBC / FCF

—

Owner earnings

−$2.9B

OCF − capex − SBC

OE yield

-2.9%

Share count 5y

+2.1%

per year; negative = buybacks

Capital intensity

—

net PP&E ÷ revenue

Sales efficiency

$10.83

new PP&E per $1 new revenue, 5y

Growth engine (5y): reinvested 70.8% of operating cash flow at an incremental return of 11.1% — an organically fundable growth rate of about 7.8% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

11 of 20 checks pass · 55%. Checks with structurally missing inputs are excluded.

Growth & Consistency

4/6

  • Revenue growth

    7.7% · 5y CAGR ≥ 5%

    pass

  • EPS growth

    6.0% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    — · 5y CAGR ≥ 5%

    na

  • Revenue rises consistently

    6 of 9 · up in ≥ 7 of last 10 years

    fail

  • FCF consistently positive

    1 of 10 · positive in ≥ 8 of last 10 years

    fail

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    7.9% vs 7.7% · OCF CAGR ≥ 0.9× revenue CAGR

    pass

Profitability

4/6

  • Net margin

    14.7% · ≥ 8%

    pass

  • Operating margin

    24.7% · ≥ 10%

    pass

  • Gross margin stable or rising

    — · no drop > 2 pts over 3y

    na

  • Return on equity

    12.1% · ≥ 12%

    pass

  • Cash ROIC

    9.6% · ≥ 12%

    fail

  • FCF margin

    -9.9% · ≥ 5%

    fail

  • Earnings back their cash

    OCF $9.8B vs NI $4.3B · OCF ≥ net income (latest FY)

    pass

Balance Sheet

1/3

  • Debt payable from cash flow

    — · LT debt ≤ 3× FCF

    na

  • Cash cushion

    2% · cash ≥ 50% of LT debt

    fail

  • Leverage

    1.82 · LT debt ≤ 1.5× equity

    fail

  • Equity positive and compounding

    $36.0B · equity > 0 and grew over ~5y

    pass

  • Interest burden

    — · interest ≤ 15% of operating income

    na

Capital Allocation

0/2

  • Share count flat or shrinking

    2.1% · ≤ +0.5%/yr over ~5y

    fail

  • Stock comp restrained

    — · SBC ≤ 15% of FCF

    na

  • Distributions funded by FCF

    — · dividends + buybacks ≤ 100% of FCF

    na

  • Repurchases are a habit

    0 of 10 · buybacks in ≥ 5 of last 10 years

    fail

Valuation Discipline

2/3

  • FCF yield

    -2.9% · ≥ 3%

    fail

  • Earnings multiple

    23.4 · P/E ≤ 25

    pass

  • Price asks less than history delivered

    — · implied FCF growth ≤ historical FCF CAGR

    na

  • Shareholder yield

    3.0% · dividends + buybacks ≥ 2% of market cap

    pass

Red flags

Mechanical checks — a flag is a question to investigate, not a verdict

Negative free cash flow

Operating cash flow did not cover capital expenditures in the latest fiscal year.

Shareholder dilution

Diluted share count has grown by more than 2% per year over ~5 years.

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
202529,553—7,2854,3413.929,80212,737-2,9353,015——1,63965,64936,0161,109
202426,724—7,0684,4013.999,7888,9558332,954——1,07058,76833,2081,102
202325,253—5,8263,9763.627,5539,095-1,5423,035——74857,21031,4441,098
202229,279—5,3703,4283.266,3027,923-1,6212,907——1,91750,65630,4081,081
202123,113—3,6982,3092.246,1697,586-1,4172,777——1,79850,12027,8741,068
202020,375—4,8853,1032.936,6967,522-8262,685——1,06545,07327,9721,065
201921,419—7,7364,7444.505,7817,555-1,7742,570——1,97541,79827,5051,054
201823,495—4,1912,3002.176,9458,001-1,0562,425——1,39640,73624,7231,025
201723,031—2,3339260.846,3947,423-1,0292,3000—2,13044,46224,1671,008
201619,896—4,4862,5292.554,8947,310-2,4162,104031,97542,62924,758958
201517,489—4,2822,4352.596,2745,6746001,95911561,40424,68820,592914
201418,467—3,6422,0312.185,8155,2465691,86652771020,64419,949901
201317,087—3,2551,7101.876,0975,3317661,762202565921,34419,008881
201216,537—4,4632,4152.674,8984,809891,6934302362819,27418,297879
201117,657—4,2312,2682.555,9034,5251,3781,6010221,31518,64718,285864
201017,456—3,8022,0402.363,9914,086-951,49602244718,15416,909837
200915,743—3,2681,7082.063,2634,670-1,4071,369—2369018,13115,585796
200817,127—3,5061,8072.253,4643,961-4971,280—2041716,81613,983775
200715,353—3,3261,7822.283,4343,546-1121,205——201—13,092761

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗