The Southern Company (SO) Fair Value & PE Analysis
Regulated Electric · NYSE
Current Price
$94.10
PE Ratio (TTM)
22.6x
Intrinsic Value
$102.64
+8.3% margin of safety
What Is The Southern Company's Fair Value?
As of 2026-07-30, applying a 23.0x earnings multiple to The Southern Company's (SO) earnings per share of $4.1 yields a fair value estimate of $102.64 per share, versus a market price of $94.1.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $84.2 to $123.75. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · SO intrinsic value (DCF view)
Is The Southern Company (SO) Overvalued?
At $94.1, SO trades about 8.3% below its PE-based fair value estimate, a modest discount to its earnings power, though not enough to call it cheap outright.
COMPETITIVE MOAT
↑Regulated Monopoly Infrastructure
Southern Company operates essential electric transmission and distribution networks. These are natural monopolies with high barriers to entry, protected by regulatory oversight.
↑Long-Term Customer Relationships
Residential and commercial customers have limited practical alternatives for electricity supply. This creates stable, predictable demand and revenue streams for the company.
↑Capital Intensity and Scale
The immense cost of building and maintaining power generation and grid infrastructure deters new competitors. Southern Company's established scale provides significant operational efficiencies.
INVESTMENT RISKS
↓Extreme Weather Events
Hurricanes, storms, and other natural disasters can cause significant damage to infrastructure. This leads to costly repairs, service disruptions, and potential regulatory penalties.
↓Environmental Regulations
Stricter regulations on emissions and carbon footprint can necessitate costly upgrades or shifts in generation sources. Compliance can impact operational expenses and capital expenditure plans.
↓Interest Rate Sensitivity
As a capital-intensive business, Southern Company relies heavily on debt financing. Rising interest rates increase borrowing costs, impacting profitability and investment capacity.
Base case
SO base case PE valuation
Intrinsic Value
$102.64
Margin of safety
+8.3%
Expected annual return
+1.8%
Base case assumptions: 7.4% annual earnings growth, 23x target PE, 10% discount rate, 5 year projection. Data as of 2026-07-30.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the SO PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for The Southern Company respond.
Open PE Calculator for SOCompany Overview
The Southern Company operates as an energy utility, primarily involved in the production, transmission, and distribution of electricity. Its operations are segmented into Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services. The company also undertakes the development, construction, acquisition, ownership, and management of various power generation assets, including renewable energy ventures, and supplies electricity to the wholesale market. Complementing its power business, it distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, while also offering gas marketing services, wholesale gas services, and managing gas pipeline investments. Its extensive portfolio of generating assets includes 30 hydroelectric, 24 fossil fuel, three nuclear, 13 combined cycle/cogeneration, 45 solar, 15 wind, one fuel cell, and four battery storage facilities. In terms of natural gas infrastructure, the company builds, operates, and maintains 76,289 miles of pipelines and 14 storage facilities with a total capacity of 157 billion cubic feet, delivering natural gas to residential, commercial, and industrial clients. The Southern Company serves approximately 8.7 million electric and gas utility customers in total. Furthermore, it provides digital wireless communications and fiber optics services. The company was founded in 1945 and maintains its corporate headquarters in Atlanta, Georgia.
Financial Metrics — SO PE Stock Valuation Data
PE Ratio (TTM)
22.6x
PEG Ratio
3.26
Earnings Yield
4.35%
ROE (TTM)
12.4%
Revenue/Share (TTM)
$26.54
Dividend Yield
3.17%
Debt/Equity
1.71x
Frequently Asked Questions
What is the PE ratio of SO?
The trailing twelve-month PE ratio of SO reflects how much investors pay per dollar of The Southern Company's earnings. This metric is most useful when compared to Regulated Electric peers and the company's own historical range.
Is SO overvalued based on PE ratio?
SO's PE of 22.6x combined with a PEG ratio of 3.26 provides a growth-adjusted perspective. A PEG above 2.0 means the P/E is high relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Regulated Electric, a DCF analysis may be more appropriate.
How do I value SO stock using PE ratio?
To value The Southern Company using PE: (1) Compare the current PE (22.6x) against the Regulated Electric median to assess relative pricing, (2) check the PEG ratio (3.26) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of SO?
SO's PEG ratio is 3.26, calculated by dividing the PE ratio (22.6x) by the expected earnings growth rate. A PEG above 2.0 means the P/E is high relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for SO stock valuation?
PE ratio gives a quick relative read — how SO is priced versus Regulated Electric peers. DCF provides an absolute value based on projected free cash flows. For the most reliable valuation, use PE as a quick comparability screen and DCF for a deeper fundamental analysis. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See SO DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Utilities valuationsP/E and DCF value SO with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-07-30. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.