Regulated Electric · NYSE
Current Price
$93.52
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on The Southern Company with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates through Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services segments. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations. In addition, it owns and/or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, three nuclear generating stations, 13 combined cycle/cogeneration stations, 45 solar facilities, 15 wind facilities, one fuel cell facility, and four battery storage facility; and constructs, operates, and maintains 76,289 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 8.7 million electric and gas utility customers. Further, the company offers digital wireless communications and fiber optics services. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.
ROIC (TTM)
4.4%
ROE (TTM)
12.5%
FCF Yield
-3.12%
Based on trailing twelve-month data, SO shows a free cash flow per share of N/A and a ROIC of 4.4%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of -3.12% are important context metrics when evaluating SO's stock valuation relative to peers.
The intrinsic value of SO depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether SO is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $93.52. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on The Southern Company: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Regulated Electric industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting SO's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For The Southern Company, this means projecting how much free cash flow the Regulated Electric will produce over the next 5-10 years, then discounting those amounts to today's dollars. SO's ROIC of 4.4% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For SO, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
