Southern Company Q3 Earnings Preview: Another Beat in Store?

The Southern Company (SO) is set to release third-quarter results on Oct. 30. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a profit of $1.50 per share on revenues of $7.6 billion.Let’s delve into the factors that might have influenced the power supplier’s performance in the September quarter. But it’s worth taking a look at Southern Company’s previous-quarter results first.Highlights of Q2 Earnings & Surprise HistoryIn the last reported quarter, the Atlanta, GA-based service provider beat the consensus mark due to higher utility revenues. Southern Company had reported adjusted earnings per share of 91 cents, which surpassed the Zacks Consensus Estimate by 4 cents. Sales of $7 billion also beat the consensus mark by 6.2%.SO topped the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. The utility has a trailing four-quarter earnings surprise of 3.2%, on average. This is depicted in the graph below:Southern Company (The) Price and EPS Surprise Southern Company (The) price-eps-surprise | Southern Company (The) QuoteTrend in Estimate RevisionThe Zacks Consensus Estimate for the third-quarter bottom line has been revised 2% downward in the past seven days. The estimated figure indicates a 4.9% improvement year over year. The Zacks Consensus Estimate for revenues suggests a 4.1% increase from the year-ago period.Factors to ConsiderServing 9 million customers across the Southeast, SouthernCompany benefits from robust regional economic and population growth. These service territories continue to attract major commercial and industrial projects, with some $2 billion in capital investment and 6,000 new jobs announced in the second quarter of 2025 alone. In particular, industrial and data center demand continues to drive long-term load expansion. This trend is most likely to have continued in the third quarter of 2025, thereby adding to SO’s earnings and cash flows.But on a bearish note, the power supplier flagged several timing and cost risks tied to delivering the new capacity. Equipment and turbine delivery timelines are competitive industrywide, and management noted upward pressure on generation costs. Additionally, second-quarter results were held back by higher operating costs, interest expense and depreciation, underscoring sensitivity to non-operating and cost trends. The increasing cost trend is likely to have continued in the third quarter. This, in turn, is expected to have dragged down overall earnings. In particular, our estimate for Southern Company’s net income is pegged at $1.5 billion, indicating a 0.9% decrease from the year-ago quarter.What Does Our Model Say?The proven Zacks model does not conclusively predict an earnings beat for SO for the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -0.22%.Zacks Rank: SO currently carries a Zacks Rank #3.Stocks to ConsiderWhile an earnings beat looks uncertain for The Southern Company, here are some firms from the utilities space that you may want to consider based on our model:Xcel Energy (XEL): It has an Earnings ESP of +0.38% and a Zacks Rank #3. Xcel Energy is scheduled to release earnings on Oct. 30.You can see the complete list of today’s Zacks #1 Rank stocks here.For 2025, Xcel Energy has a projected earnings growth rate of 8.9%. Valued at around $47.7 billion, it has gained 23.5% in a year.ONE Gas, Inc. (OGS): It has an Earnings ESP of +1.14% and a Zacks Rank #2. ONE Gas is scheduled to release earnings on Nov. 3.For 2025, ONE Gas Energy has a projected earnings growth rate of 11.3%. Valued at around $5 billion, it has gained 11.7% in a year.The AES Corporation (AES): It has an Earnings ESP of +6.48% and a Zacks Rank #3. The AES Corporation is scheduled to release earnings on Nov. 4.The AES Corporation beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, with the average being 20.2%. Valued at around $10.2 billion, it has lost 16.4% in a year.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Xcel Energy Inc. (XEL): Free Stock Analysis Report Southern Company (The) (SO): Free Stock Analysis Report The AES Corporation (AES): Free Stock Analysis Report ONE Gas, Inc. (OGS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks