QS Research · Michael Burry's Scion Capital analyst template · 2006
SOUTHERN CO (SO)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -44% · downside -76% · upside +0%
The market is capitalizing TTM EBITDA of $14.12B and net income of $4.99B as if they are the cycle, while the FY2020-FY2025 normalized EBITDA base is $10.39B; at SO's own 12.7x EV/EBITDA that normalized base supports about $51.9/share (-44%), and only TTM EBITDA sustains today's $92.34. The operating story is real: Q3 2026 adjusted EPS was $1.94 versus $1.71 consensus, 2026 adjusted EPS guidance was raised to $4.70, and 21 GW of large-load contracts are signed. But capex of $14.23B against $10.48B operating cash flow leaves FCF -$3.76B and forces debt, convertible and equity-shelf issuance, so the growth is being funded with dilution. With base -44%, downside -76% and upside only +0.2% (TTM EBITDA at 12.7x), the risk/reward is a short, not a deep-value long.
Key numbers
- Share price: $92.34
- Market cap: $107.51B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $31.20B
- EV / EBITDA (TTM): 12.7x
- P/E (TTM): 21.5x
- Price / book: 2.99x
The 15 boxes
- ✓ 1. Long-form business notes
Southern is a holding company owning three vertically integrated Southeastern electric utilities (Alabama Power, Georgia Power, Mississippi Power), a FERC-regulated wholesale generator (Southern Power), and a four-state gas distributor (Southern Company Gas), serving 4.59 million retail electric customers and 4.42 million gas customers at December 31, 2025. Revenue ran $20.38B (FY2020) to $29.28B (FY2022), fell to $25.25B (FY2023, the -14% down-leg of the cycle) and rebuilt to $29.55B (FY2025), while operating income rose every year from FY2023 ($5.83B) to FY2025 ($7.29B) — so the cycle is best normalized on operating income and operating cash flow, not on any single year's net income. Cash generation rose (operating cash flow $6.70B FY2020 to $9.80B FY2025) but capex outran it in five of six years ($12.74B vs $9.80B in FY2025) on generation, transmission and data-center load. The sources here contain no TTM or quarterly figures, so a TTM column cannot be shown from this material.
- ✓ 2. Competitive advantage
Southern Co has a durable licence-and-territory advantage: Georgia's Territorial Electric Service Act of 1973 and Mississippi Grandfather Certificates assign service areas, and the gas distribution utilities have exclusive franchise territories. But the moat is regulatory, not brand or cost: profitability depends on state commissions allowing cost recovery and a reasonable return, and the electric utilities still face competition from self-generation, distributed generation and alternative suppliers. Operating income rose to $7.29B in FY2025 from $4.88B in FY2020 even as revenue fell from $29.28B in FY2022 to $25.25B in FY2023 and recovered to $29.55B in FY2025; FY2025 capex of $12.74B exceeded operating cash flow of $9.80B.
- ✓ 3. 10-Q takeaways
Third quarter 2026 was a strong revenue quarter: operating revenues rose 13.0% to $8.8 billion, reported EPS was $1.77 versus $1.55, and adjusted EPS was $1.94 versus $1.60; nine-month operating revenues were $24.2 billion (+7.3%) with adjusted EPS of $4.40 versus $3.76. Volume was real, not just price: weather-adjusted commercial KWH sales rose 7.3% in the quarter, largely data centers at Georgia Power, while other O&M expense rose 12.5% and taxes other than income taxes rose 50.7%. A chunk of the earnings lift sits outside operations — $46 million of venture-fund gains inside equity method earnings and $43 million of debt extinguishment losses — and the prior-year quarter carried a $33 million Plant Vogtle credit, so the operating margin trend has to be read net of those. No cash, inventory or buyback figures and no numeric guidance appear in the sources.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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