SO
The Southern Company
$94.55
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 27.6% above fair value
You pay
$94.55
Bear
$64.82
Fair
$74.09
Bull
$83.34
Bear
$64.82
-31.4%
$3.94 × 14x P/E
Fair
$74.09
-21.6%
$3.94 × 16x P/E
Bull
$83.34
-11.9%
$3.94 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
24.0x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $99.77 from 33 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $74.09 per share.
Warnings
Wall Street's average price target is $99.77 (from 33 analysts). Our estimate is 37% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples