The Southern 2025 Q2 Earnings Misses Targets with 28.2% Net Income Decline

The Southern (SO), ranking 138th by market capitalization, reported its fiscal 2025 Q2 earnings on July 31st, 2025. The company's results fell short of expectations, with a significant decline in net income and earnings per share (EPS) compared to the previous year. Despite this, Southern Company raised its five-year capital plan, underscoring its commitment to future growth. The guidance for adjusted EPS in 2025 suggests a slight improvement, although Q2 results did not meet the anticipated targets.

Revenue
In the second quarter of 2025, The Southern experienced a 7.9% increase in total revenue, reaching $6.64 billion, compared to $6.15 billion in Q2 2024. Electric Utilities generated $5.80 billion, while Traditional Electric Operating Companies contributed $5.38 billion. Southern Power added $546 million, and Southern Company Gas reported $979 million. The All Other segment brought in $225 million, with total revenue consolidating at $6.97 billion after accounting for eliminations.

Earnings/Net Income
The Southern's EPS fell sharply by 27.3%, down to $0.80 in 2025 Q2 from $1.10 in 2024 Q2. The company's net income also saw a significant drop, declining 28.2% to $853 million from $1.19 billion in the previous year's corresponding quarter. The earnings performance was notably weaker than expected, reflecting challenges in maintaining profitability.

Price Action
The stock price of The Southern edged down 0.42% during the latest trading day, decreased 0.55% during the most recent full trading week, and increased 2.89% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing The Southern (SO) shares following a revenue increase on the financial report release date and holding for 30 days has proven ineffective over the past three years, resulting in a cumulative return of -14.69%. This performance significantly underperformed the broader market, highlighting that revenue gains alone do not necessarily signal positive future performance. The recent earnings report demonstrated that despite revenue slightly exceeding estimates, the company missed on earnings and experienced declines in both net income and EPS. Investors are advised to recognize the limitations of this approach and consider alternative strategies to generate positive returns moving forward.

CEO Commentary
"This is an exciting time for Southern Company. We performed well both financially and operationally through the first half of the year and remain well positioned to deliver on our 2025 goals," said Chris Womack, Chairman, President, and CEO. He highlighted strong revenue growth driven by increased retail electric sales and significant industrial sales, particularly in the data center segment. Womack acknowledged challenges such as higher operating costs and regulatory impacts, but expressed confidence in the company's strategic investments and commitment to customer satisfaction, emphasizing a balanced approach to growth, reliability, and affordability.

Guidance
Southern Company expects adjusted EPS for 2025 in the range of $4.20 to $4.30, with a midpoint indicating 6% growth from 2024 guidance. For Q3 2025, the consensus EPS forecast is $1.52. The company anticipates total revenue for Q2 2025 to be approximately $6.64 billion. Additionally, Southern Company has raised its five-year capital plan to $76 billion, reflecting strong projected customer and load growth.

Additional News
Southern Company has announced a significant increase in its five-year capital expenditure plan, raising it to $76 billion. This substantial investment reflects its strategy to enhance customer and load growth through strategic infrastructure improvements and expansions. Additionally, there have been no major changes in the company's executive leadership, with Chris Womack continuing to serve as Chairman, President, and CEO. The firm also remains committed to its current dividend policy, providing consistent returns to shareholders amidst the evolving market conditions, reinforcing its stable financial strategy.