On Friday, BMO Capital Markets adjusted its outlook on Southern Co . (NYSE: NYSE:SO), reducing the utility company's price target to $97 from $99, while sustaining an Outperform rating on the stock. The modification follows Southern Co.'s third-quarter earnings report, which disclosed earnings per share (EPS) of $1.43, surpassing both BMO Capital's and the consensus estimate of $1.35.
Southern Co. has projected its full-year 2024 earnings to reach $4.05 per share, which is slightly above the consensus estimate of $4.03 and BMO Capital's forecast of $4.00 at the time of the report. This forecast sits at the upper end of the company's initial full-year guidance range of $3.95 to $4.05. The company also plans to present its outlook for 2025 and update its capital and financing strategy during the fourth-quarter 2024 earnings call.
BMO Capital anticipates Southern Co. will set its 2025 earnings guidance in the range of $4.25 to $4.35 per share, indicating an approximate 6% year-over-year growth. The firm's management has reiterated its commitment to a long-term EPS growth rate of 5% to 7%.
The analyst at BMO Capital concluded by stating their continued support for the Outperform rating, noting that the move to a $97 price target per share is based on a mark-to-market (MTM) and sum-of-the-parts (SOTP) valuation approach.
InvestingPro Insights
Southern Co.'s financial metrics and market performance align well with BMO Capital's positive outlook. According to InvestingPro data, the company's P/E ratio stands at 20.83, with an adjusted P/E ratio of 21.62 for the last twelve months as of Q2 2024. This relatively modest valuation is complemented by a strong dividend yield of 3.16% and a consistent track record of dividend payments.
InvestingPro Tips highlight Southern Co.'s impressive dividend history, having raised its dividend for 23 consecutive years and maintained payments for 54 years. This aligns with the company's stable financial position and BMO Capital's expectation of continued earnings growth.
The company's recent performance is also noteworthy, with a 33.5% year-to-date price total return and a 38.17% return over the past year. These figures support BMO Capital's Outperform rating and suggest investor confidence in Southern Co.'s strategy and market position.
For readers interested in a deeper analysis, InvestingPro offers 7 additional tips for Southern Co., providing further insights into the company's financial health and market prospects.
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