Southern Company (SO) Stock Forecast & Price Target

Southern's stock outlook is positively influenced by a projected 8% growth in electric load from 2025 to 2029, driven by factors such as in-migration, data center expansion, and increased manufacturing activity. The company maintains a solid balance sheet, with a current funds from operations (FFO) to debt ratio of approximately 15.3%, which management anticipates will improve to 17% by the end of the forecast period, positioning it favorably within the industry. Furthermore, Southern's diversified portfolio, including its significant generating capacity and long-term contracts for electricity sales, further strengthens its financial stability and growth potential.

Southern Company is experiencing significantly slower dividend growth at approximately 2.5%, compared to its peers which average around 5.5%, indicating potential weaknesses in its financial performance relative to the industry. Additionally, the company's dividend yield midpoint of 6% is below the average of its coverage universe, further suggesting that its valuation may not be justified given its lackluster growth metrics. These factors collectively contribute to a negative outlook on Southern's stock, reflecting concerns about its ability to deliver competitive returns to investors.