SO
The Southern Company
Utilities · Utilities - Regulated Electric · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The composite score of 44.8/100 reflects a mixed profile: meaningful revenue growth and solid operating margins are offset by declining net income and EPS in FY2025.
- Elevated leverage with a debt-to-equity of 1.82 and thin interest coverage of 2.2, combined with volatile quarterly operating income, weighed on the financial health and momentum components.
- The Nuclear & Uranium theme assignment scored zero under the model's current methodology, and the high 69.5% dividend payout ratio limited the dividend score, both contributing to the moderate composite result.
Why Not Higher
- Bottom-line contraction — net income down -1.4% and EPS down -1.8% in FY2025 — alongside a low 2.8% return on assets prevented the growth and profitability factors from scoring higher.
- The theme assignment to Nuclear & Uranium did not produce a positive score under the current model methodology, and the steep operating income drop in 2025Q4 to $917,000,000 suppressed the momentum score.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $26,724,000,000 to FY2025's $29,553,000,000, a gain of +10.6%, but net income declined -1.4% from FY2024's $4,401,000,000 to FY2025's $4,341,000,000, and diluted EPS fell -1.8% from FY2024's $3.99 to FY2025's $3.92.
The model rewarded meaningful top-line expansion but penalized the simultaneous contraction in bottom-line earnings and per-share profitability, producing a middling score that reflects this mixed growth profile.
In FY2025, Southern Company posted an operating margin of 24.7% and a net margin of 14.7%, while return on assets came in at 2.8%.
The model recognized solid operating and net margins typical of a regulated utility, but the low 2.8% return on assets in FY2025 — reflecting the capital-intensive nature of the business — tempered the overall profitability score.
In FY2025, Southern Company carried a debt-to-equity ratio of 1.82 and an interest coverage ratio of 2.2, against a total asset base of $155,720,000,000.
The model reflects the elevated leverage and thin interest coverage characteristic of large regulated utilities with massive capital programs, partially offset by the scale of the asset base, yielding a moderate financial health score.
Over the last four reported quarters, revenue moved from $6,973,000,000 in 2025Q2 to $7,823,000,000 in 2025Q3, then dipped to $6,982,000,000 in 2025Q4 before jumping to $8,397,000,000 in 2026Q1; operating income followed a similarly volatile path of $1,764,000,000, $2,594,000,000, $917,000,000, and $2,018,000,000 across those same quarters.
The model appears to have penalized the sharp sequential swings — particularly the steep operating income drop in 2025Q4 — rather than rewarding the strong 2026Q1 rebound, resulting in a low momentum score.
Southern Company's dividends per share have risen steadily from $2.70 in FY2022 to $2.78 in FY2023, $2.86 in FY2024, and $2.94 in FY2025, but the FY2025 dividend payout ratio stands at 69.5% of net income.
The model credited the consistent multi-year dividend growth trend while discounting the high 69.5% payout ratio in FY2025, which leaves limited earnings cushion and constrains the overall dividend score.
Southern Company is assigned to the Nuclear & Uranium macro theme.
Although the Nuclear & Uranium theme is assigned, this assignment did not translate into a positive score under the model's current methodology.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Southern Company posted solid top-line growth of +10.6% in FY2025, reaching $29,553,000,000 in revenue, but bottom-line results were mixed as net income slipped -1.4% to $4,341,000,000 and diluted EPS fell -1.8% to $3.92. Profitability metrics reflect a typical regulated utility profile — a 24.7% operating margin and 14.7% net margin — though a 2.8% return on assets underscores the capital-intensive nature of the business. Financial health is constrained by a debt-to-equity ratio of 1.82 and an interest coverage ratio of just 2.2, while quarterly operating income swings — most notably a steep drop to $917,000,000 in 2025Q4 — weighed on momentum. The company's consistent dividend growth and Nuclear & Uranium theme assignment were insufficient to lift the composite score, which stands at 44.8/100 with a Medium risk rating and a Monitor Only label.
Plain English
Southern Company is a large utility that grew its sales nicely in 2025, but profits actually dipped slightly, it carries a lot of debt, and its quarterly earnings have been pretty volatile — so while it pays a steadily rising dividend, the overall picture is mixed enough that the model says to keep an eye on it rather than act.
Bull Case vs. Bear Case
Bull Case
- Revenue expanded meaningfully, rising +10.6% year-over-year to $29,553,000,000 in FY2025, demonstrating the company's ability to grow its top line.
- Operating and net margins of 24.7% and 14.7% respectively in FY2025 reflect the durable earnings power typical of a regulated utility franchise.
- Dividends per share have grown every year from $2.70 in FY2022 to $2.94 in FY2025, signaling a consistent commitment to returning capital to shareholders.
Bear Case
- Despite revenue growth, net income declined -1.4% and diluted EPS fell -1.8% in FY2025, indicating that top-line gains are not translating into improved per-share profitability.
- A debt-to-equity ratio of 1.82 and an interest coverage ratio of only 2.2 in FY2025 leave limited financial cushion if earnings or cash flows deteriorate.
- Quarterly operating income was highly volatile — swinging from $2,594,000,000 in 2025Q3 down to $917,000,000 in 2025Q4 — raising questions about earnings consistency.
What Could Change the Picture
Bullish Triggers
- A sustained improvement in quarterly operating income stability, moving away from the sharp swings seen between 2025Q3 and 2025Q4, could signal improving earnings quality.
- If the Nuclear & Uranium macro theme assignment begins to translate into a measurable financial or strategic contribution, it could provide an additional growth dimension not yet reflected in scores.
Bearish Triggers
- A further compression in interest coverage below the already thin 2.2 level in FY2025 would heighten financial health concerns given the company's $155,720,000,000 asset base funded heavily by debt.
- Continued divergence between revenue growth and net income — as seen with +10.6% revenue growth alongside -1.4% net income decline in FY2025 — would suggest worsening cost or margin pressures.
Risk Profile
Medium RiskSouthern Company carries elevated financial risk, with a debt-to-equity ratio of 1.82 and an interest coverage ratio of just 2.2 in FY2025 against a $155,720,000,000 asset base, leaving limited buffer against earnings shortfalls. Quarterly operating income has also been highly volatile, dropping sharply to $917,000,000 in 2025Q4 before rebounding to $2,018,000,000 in 2026Q1, adding uncertainty to near-term cash flow visibility.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.