SO Stock Declines 6% in Past 6 Months: Here's How to Play

The Southern Company's SO shares have lost 5.9% over the past six months against the Zacks Utility-Electric Power industry’s gain of 9.1% and the broader utility sector’s rise of nearly 7.3%.

Shares of other operators in the same industry, such as Ameren Corporation AEE, CenterPoint Energy, Inc. CNP and Dominion Energy, Inc. D, have gained 2%, 3.5% and 4.5%, respectively, during the aforementioned period. Ameren has benefited from its systematic and consistent investments in growth projects and infrastructural upgrades in recent times. CenterPoint Energy is benefiting from rising electricity consumption, driven by the electrification of transportation and buildings. Dominion Energy has a well-chalked-out long-term capital expenditure plan to strengthen and expand its infrastructure, which will strengthen its operations.

Stock Price Change Over the Past Six Months

Given the current underperformance in price, should you consider including Southern Company in your portfolio? Let's examine the factors in detail and assess the investment prospects.

Factors Driving the Performance of SO Stock

Exceptional Large-Load Growth and Demand Visibility: Southern Company stands at the center of a once-in-a-generation demand boom, driven by data centers, industrial expansions and rising commercial loads. The company has already secured 7 GW of contracted large-load demand through 2029, with a pipeline exceeding 50 GW. These long-term, credit-quality contracts include minimum billing mechanisms that ensure full cost recovery and protect existing customers, creating a durable earnings and cash-flow runway through the decade.

Constructive Regulatory Environment Supporting Long-Term Stability: Southern Company benefits from highly supportive state regulatory frameworks across Georgia, Alabama and Mississippi. Georgia Power’s rate plan extends base-rate stability until 2029, reinforcing affordability and transparency for customers while providing predictable returns for investors. These constructive, long-standing regulatory relationships allow SO to approve and execute major generation and infrastructure expansions efficiently, lowering project risk and strengthening the company’s premium utility profile. Recently, Alabama Power, a subsidiary of Southern Company, also declared that it commits to offering families and businesses a steady rate through 2027.

Massive Capital Investment Pipeline With Low Execution Risk: With a $76 billion capital plan through 2029, SO is positioned to modernize its grid, expand natural gas and storage capacity, and develop new generation to meet surging demand. Projects such as 11 battery storage sites, multiple new gas units and the 900 MW Lindsay Hill acquisition are already underway or approved. This robust pipeline, backed by regulatory alignment and proven construction capabilities, provides long-term rate-base growth and future EPS expansion potential with limited execution uncertainty.

High-Quality Customer Growth and Expanding Economic Base: The Southeast remains one of the fastest-growing U.S. regions, and Southern Company is capturing that momentum. Retail electricity sales rose across all customer classes, with commercial sales up 3.5% and residential customers increasing by 12,000 in the third quarter alone. Economic development remains strong, with 22 companies announcing expansions or new facilities in SO’s territories. This expanding regional economic ecosystem drives structural, not cyclical, load growth — supporting durable long-term revenue expansion.

SO Stock’s Earnings Estimate

The Zacks Consensus Estimate for SO’s 2025 earnings per share (EPS) indicates an increase of 5.7% year over year.

SO’s Earnings Estimates

The Zacks Consensus Estimate for Ameren, CenterPoint Energy and Dominion Energy’s 2025 EPS indicates an increase of about 8%, 9.3% and 22.7%, respectively, year over year.

SO’s Dividend History

The consistently strong performance of the company has enabled it to reward its shareholders through annual dividend rate hikes. Currently, its annual dividend is $2.96 per share with a favorable annualized yield of 3.4% when compared to its peers. The annualized dividend yield of Ameren, CenterPoint Energy and Dominion Energy stands at 2.9%, 2.3% and 4.6% respectively.

Dividend Yield

Southern Company’s payout climbed by about 3% during the last five years, with its payout ratio at 70% of its profits. It is anticipated that the company will continue to increase its dividend in the future, driven by its sustained earnings growth. Check Southern Company’s dividend history here.

SO Stock Trades at a Premium

From a valuation perspective — in terms of forward price-to-earnings ratio — Southern Company is trading at a premium valuation of 18.7X compared with the industry average of 14.8X.

SO’s Premium Valuation

Summing Up

Southern Company is benefiting from a unique surge in large-load demand, backed by 7 GW of contracted growth and a 50-GW pipeline, ensuring strong long-term visibility. Supportive regulation across Georgia, Alabama and Mississippi — with rate stability through 2027-2029 — further strengthens its investment appeal. A $76B capital plan, including major gas and storage projects, enhances grid capacity while maintaining low execution risk. Rapid customer additions and robust regional economic expansion continue to fuel sustained revenue and load growth.

However, the company’s premium valuation and lower return than the industry and peers are concerning at the moment. The investors can retain this Zacks Rank #3 (Hold) stock for now and enjoy the benefits of regular dividends and earnings growth estimates. The new investors can wait and look for a better entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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