Southern Company (The)
SO · NYSE
Next quarter
Expected to report Oct 29, 2026 — estimated from last year’s reporting date.
Consensus is $1.64 EPS for Sep 2026 across 2 estimates, ranging $1.64 to $1.65.
SO Jun 2026
- 11.88%
- +0.21%
- $1.01
- $1.13
- —
- —
Highlights
- Adjusted earnings: Second-quarter adjusted EPS was $1.13, 11.9% above the $1.01 consensus and up from $0.92 a year earlier.
- Reported earnings: GAAP EPS was $1.03, versus $0.80 in Q2 2025; net income attributable to Southern Company increased 33.4% to $1.17 billion.
- Revenue: Operating revenue was essentially flat year over year at $6.98 billion, up from $6.97 billion, while first-half revenue rose 4.2% to $15.37 billion.
- Regulated utilities: Traditional electric operating companies contributed $1.27 billion of net income, up from $1.05 billion, with EPS growth driven by investment, customer usage, equity-method earnings and lower taxes.
- Demand: Total electricity sales rose 3.9% year over year, including 7.3% growth in commercial sales and 9.2% growth in wholesale sales; regulated utility customers increased 0.7% to 9.0 million.
- Construction recovery: Allowance for equity funds used during construction rose $48 million year over year to $128 million, contributing 4 cents to the quarter’s adjusted EPS increase.
- Southern Power: The segment posted a $25 million net loss versus $51 million of income a year earlier, reflecting $111 million of after-tax accelerated depreciation and decommissioning charges tied to wind-facility repowering.
- Gas operations: Southern Company Gas net income increased 18.9% to $126 million, helped by operating performance and a $7 million after-tax tax refund, partly offset by a $6 million after-tax Nicor Gas investment charge.
Analysis
Southern Company’s second quarter was an earnings-growth and demand quarter rather than a revenue-growth quarter. Adjusted EPS of $1.13 exceeded the $1.01 consensus by 12% and rose 23% from $0.92 in Q2 2025. Reported EPS was $1.03, versus $0.80 a year earlier, while attributable net income increased 33% to $1.17 billion. The quarter was seasonally lower than Q1 2026, when reported revenue was $8.04 billion, net income was $1.36 billion and EPS was $1.20. Operating income was $1.78 billion, compared with $2.02 billion in Q1.
The underlying improvement came primarily from the regulated electric businesses. Commercial electricity sales rose 7.3%, total sales increased 3.9%, and customer growth supported higher earnings from state-regulated utility investment. Lower income taxes, stronger equity-method earnings and higher construction allowances also helped, while higher interest expense was a partial offset. Southern Power was the principal drag, moving to a $25 million loss from $51 million of income as repowering charges expanded. First-half adjusted EPS rose to $2.46 from $2.15, and management framed Southeast economic development and large-load demand as the basis for continued infrastructure investment.
Earnings and financial bridge
Southern Company delivered substantial profit growth despite nearly unchanged quarterly revenue. The earnings improvement was concentrated below the revenue line and in the regulated portfolio.
- Reported result: Net income attributable to Southern Company rose $294 million, or 33.4%, to $1.17 billion. Operating income increased only $12 million to $1.78 billion, but allowance for equity funds used during construction rose $48 million to $128 million, equity-method earnings increased $76 million to $86 million and income taxes fell $102 million to $187 million.
- Adjusted result: Adjusted net income increased to $1.29 billion from $1.01 billion, lifting adjusted EPS to $1.13 from $0.92. The 21-cent adjusted EPS increase included 20 cents from the traditional electric companies, 2 cents from Gas, 3 cents from parent and other items, and a 4-cent dilution headwind from higher share count.
- Year to date: First-half reported net income rose 14.3% to $2.53 billion, while adjusted net income increased 17.1% to $2.78 billion. Adjusted EPS was $2.46, up from $2.15 despite average shares rising to 1.13 billion from 1.10 billion.
Regulated utility growth
The regulated electric businesses were the central strength of the print. Their earnings reflected rate-base investment and construction activity, improving usage and customer growth, rather than a broad revenue surge.
- Traditional electric earnings: Net income increased to $1.27 billion from $1.05 billion, contributing 20 cents of the 21-cent year-over-year adjusted EPS increase. Alabama Power net income rose 14.7% to $437 million, while Georgia Power increased 28.3% to $779 million.
- Demand mix: Total electricity sales increased 3.9% to 51.8 billion kilowatt-hours. Retail sales rose 2.1%, led by commercial sales up 7.3%; residential sales declined 1.5% and industrial sales were flat. Wholesale sales increased 9.2%.
- Customer base: Regulated utility customers grew 0.7% to 9.0 million, comprising 4.61 million electric customers and 4.39 million Southern Company Gas customers.
Load growth investment
Management emphasized Southeast economic development and the resulting need to invest for new and existing customers while maintaining reliability and rate stability. The reported operating data support that thesis, with commercial and wholesale demand growing faster than residential demand.
- Construction contribution: Allowance for equity funds used during construction contributed 4 cents to the quarterly adjusted EPS change and 9 cents to the first-half change, rising to $248 million year to date from $153 million.
- Revenue profile: Quarterly operating revenue was $6.98 billion, up only 0.1% year over year because lower fuel revenue and natural gas revenue offset higher non-fuel retail and wholesale electric revenue. First-half revenue growth was stronger at 4.2%, reaching $15.37 billion.
- Execution balance: The company is pairing demand-driven capital investment with customer-affordability and rate-stability objectives. The filing identifies large-load growth, particularly from data centers, as an opportunity but also flags capital access and revenue-recovery risks.
Southern Power repowering
Southern Power was the main earnings drag and the clearest source of reported-versus-adjusted distortion. Its quarterly loss reflected the continuing cost of repowering certain wind facilities.
- Segment result: Southern Power reported a $25 million net loss, compared with $51 million of net income in Q2 2025. Revenue declined 2.0% to $535 million.
- Repowering charges: Accelerated depreciation and decommissioning costs were $143 million pre-tax, or $111 million after tax, versus $40 million pre-tax a year earlier. The charge reduced quarterly EPS by 7 cents relative to the prior-year period.
- Remaining charges: Southern expects approximately $205 million of additional pre-tax accelerated depreciation and decommissioning costs in 2026 and $120 million in 2027, with the repowering projects projected to be completed through the third quarter of 2027.
Gas operations and adjustments
Southern Company Gas provided a smaller but positive contribution, while one-off items remained material enough to separate the operating result from GAAP earnings.
- Gas performance: Southern Company Gas net income rose 18.9% to $126 million, despite revenue declining 1.3% to $966 million. First-half net income increased 9.4% to $573 million on revenue growth of 12.0% to $3.16 billion.
- Nonrecurring items: Q2 included an estimated $6 million after-tax loss related to Nicor Gas capital investments disallowed by the Illinois Commerce Commission and a $7 million after-tax state income tax refund related to the 2018 Elizabethtown Gas disposition.
- Year-over-year comparability: The prior-year quarter included an $97 million after-tax debt-extinguishment charge, while 2026 included no comparable quarterly charge. This benefited the reported comparison but was excluded from adjusted earnings.
