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 History

In 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) Quote

Trend in Estimate Revision

The 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 Consider

Serving 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 Consider

While 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.

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This article originally published on Zacks Investment Research (zacks.com).

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