Fact Summary
Southern Company is a utility holding company that supplies electricity and gas across the southeastern United States, including Georgia, Alabama, and Mississippi, and posted second-quarter 2026 adjusted EPS of $1.13 (up $0.21 year-over-year). On July 22, 2026, Georgia Power signed a 25-year, 3.2GW power supply agreement with OpenAI, and data-center-related electricity usage rose 55% year-over-year. In early August 2026, the company issued a total of $2.731 billion in convertible preferred notes, and its credit ratings were upgraded to Moody's Baa1 and S&P BBB+. The company raised its April 2026 quarterly dividend to $0.76 per share (annualized $3.04), extending its streak of dividend increases to 25 consecutive years.
Price-Change Context Note
Immediately after the Q2 2026 earnings release on July 30, 2026, revenue fell short of market expectations (company-reported revenue of approximately $6.977 billion), and the stock fell more than 2% intraday at one point, subsequently trading in the $92-93 range during the first week of August. During the same period, the Georgia Public Service Commission's (PSC) approval of the fuel cost and storm cost recovery docket (May 28) reduced the annual bill for a typical residential customer by about $50, while grid investment tied to the expansion of large data-center contracts continued in parallel.
Business Structure
Southern Company is a holding company comprising three state-regulated electric utility subsidiaries — Georgia Power (approximately 2.8 million retail electric customers), Alabama Power (approximately 1.6 million), and Mississippi Power (approximately 193,000) — along with unregulated wholesale generation subsidiary Southern Power, Southern Company Gas (4.4 million gas customers across four states), and nuclear-generation operating subsidiary Southern Nuclear (Source: southerncompany.com, as of 2026-05).
Q2 2026 Earnings and Data Center Demand
Second-quarter 2026 revenue was reported at approximately $6.977 billion (reporting based on the company's earnings release, 2026-07-30). On July 22, 2026, Georgia Power signed a 25-year agreement to supply 3.2GW of power to OpenAI. The facility will be built on a 1,400-acre site in Effingham County near Savannah, with supply beginning in phases starting in 2028 and expanding through 2032. Under Georgia Public Service Commission (PSC) rules, infrastructure and power-supply costs are borne entirely by OpenAI and are not passed on to existing ratepayers. OpenAI has agreed to provide up to 1,000MW of flexible load curtailment (demand response) (Source: Georgia Power press release, 2026-07-22, PR Newswire).
According to a 2026-08-04 report, the Georgia PSC is reviewing the power supply agreement, and the timing and outcome of final approval are not available (The Current, 2026-08-04).
Five-Year Financial Trend
| Year | Operating Margin | Net Margin | Total Debt / Total Equity |
|---|---|---|---|
| 2021 | 16.0% | 10.0% | 3.41x |
| 2022 | 18.3% | 11.7% | 3.30x |
| 2023 | 23.1% | 15.7% | 3.31x |
| 2024 | 26.4% | 16.5% | 3.27x |
| 2025 | 24.6% | 14.7% | 3.24x |
| Q1 2026 (YoY) | Operating income +0.4% | Net income +1.6% | 2.93x |
Revenue grew from $23.11 billion in 2021 to $29.55 billion in 2025, a compound annual growth rate of 6.4% (per filings of record). Operating income nearly doubled over the same period, from $3.70 billion to $7.29 billion (+18.5% CAGR), but 2025 operating margin and net margin each slipped 1.8 percentage points from 2024. In Q1 2026, revenue rose 8.0% year-over-year (from $7.775 billion to $8.397 billion), while growth in operating income (+0.4%) and net income (+1.6%) was limited (per filings of record).
Peer Comparison
| Ticker | Market Cap | P/E (Trailing) | P/E (Forward) | Dividend Yield |
|---|---|---|---|---|
| Southern Company (SO) | $104.49B (of record) | 22.32x | 20.00x | 3.22-3.28% |
| Duke Energy (DUK) | $98.44B | 19.32x | 18.66x | 3.39% |
| NextEra Energy (NEE) | $179.19B | 22.13x | N/A | approx. 2.6% |
| Dominion Energy (D) | $58.75B | 17.56x | 16.97x | 3.96% |
| American Electric Power (AEP) | $68.45B | 20.98x | N/A | 3.01-3.02% |
In May 2026, NextEra Energy announced a proposal to acquire Dominion Energy in an all-stock deal valued at approximately $67 billion. If completed, the deal would create the largest regulated electric utility in the United States and requires approval from FERC and the public service commissions of Virginia, North Carolina, and South Carolina. NextEra's past attempts to acquire Duke Energy, Hawaiian Electric, and Oncor were all previously abandoned at the regulatory stage (Source: TIKR, Wikipedia, 2026-05).
Valuation (Factual Multiples)
MarketBeat reports somewhat different figures for the same metrics — trailing P/E of 24.72x and forward P/E of 20.99x — likely reflecting differences in the calculation basis (e.g., TTM period), though the exact methodology is not available.
Ownership and Flow Trends
Form 4 filings by officers and major shareholders identified between February and August 2026 were, excluding option grants, entirely dispositions of shares (no acquisition filings were identified). These include Comptroller Kim Matthew M., who repeatedly disposed of 100 shares per month, as well as dispositions by Greene Kimberly S. (Chair, President & CEO) of 25,000 shares (2026-03-30) and Connally Stan W. (EVP and COO) of 12,500 shares (2026-03-18) (Source: secform4.com). During the same period, individual 13F filings showed a mixed picture, with increased holdings by IFM Investors, PensionDanmark, and Schnieders Capital, and a reduced holding by Atria Wealth Solutions (-66.7%); the net aggregate institutional flow is not available.
Governance and Capital Structure
Southern Company's five core operating subsidiaries (Georgia Power, Alabama Power, Mississippi Power, Southern Power, and Southern Company Gas) were wholly (100%) owned directly by the parent as of December 31, 2025 (10-K audit opinion, Accession No. 0000092122-26-000006). Only renewable energy project entities under Southern Power hold partial ownership stakes in the 51-99% range through tax-equity partnership structures.
| Date | Event |
|---|---|
| 2026-05-13 | Annual shareholder meeting; all 12 directors elected (96.98-99.00% approval) |
| 2026-08-03 | Convertible preferred notes private placement disclosed (pricing) |
| 2026-08-06 | 8-K filed confirming completion of convertible preferred notes issuance (total $2.731B) |
Macro Environment
| Factor | Current Value (As of) | Impact |
|---|---|---|
| US 10-Year Treasury Yield | 4.65-4.74% (2026-08-03 to 08-07) | Negative Reduces relative appeal of dividend stocks; raises financing costs |
| Fed Funds Rate | 3.50-3.75% (held 2026-06-17) | Neutral |
| Credit Rating | Moody's Baa1, S&P BBB+ (upgraded) | Positive Partially offsets financing cost pressure |
| Henry Hub Natural Gas | Q3 2026 average forecast $3.37/MMBtu (EIA) | Neutral Limited direct impact on earnings, as fuel costs are 100% passed through to consumers |
| Georgia Data Center Power Demand | Q1 2026 +42% YoY; 17GW in large-load contracts | Positive Drives revenue and earnings growth |
| US CPI (Year-over-Year) | 3.5% (June 2026) | Positive Eases operating cost pressure (mild effect) |
The finalization of U.S. Department of Energy (DOE) loan guarantees in June 2026 (Georgia Power $22.4B and Alabama Power approximately $4.1B, totaling $26.54B, approved 2026-02-25) is estimated to reduce annual interest expense by approximately $300 million, partially offsetting upward pressure on financing costs from the high-interest-rate environment (Source: EnkiAI, PowerMag).
Risk Factors
The business is structurally dependent on approvals from the four southeastern-state PSCs, FERC, and the NRC. Large power-supply agreements for data centers are structured so costs cannot be passed on to existing ratepayers, meaning cost-allocation review for similar future agreements could be a recurring factor.
Vogtle Units 3 and 4 were completed at a cost of $36.8 billion after a seven-year delay, and on 2026-02-06 Southern Nuclear (SNC) filed an application to amend the Unit 3 license (a one-fuel-cycle delay), reflecting ongoing regulatory engagement. Similar delay risk could recur in any future nuclear expansion based on the Nth-of-a-Kind standard design.
Coastal areas of the southeastern U.S. lie within the hurricane track (June-November), presenting ongoing seasonal risk of infrastructure damage and recovery costs; while such costs are recovered through rates via the Storm Cost Recovery docket, the timing and amount are subject to regulatory review.
The regulated utility structure maintains total debt-to-total equity at approximately 3x, and with the 10-year Treasury yield at 2026 highs (4.65-4.74%), there is upward pressure on the cost of new debt financing.
The Q2 2026 surge in data-center power demand (+55% YoY) is a key driver of earnings growth, but reliance on a small number of large customers is deepening. Actual power supply to OpenAI is scheduled to begin in 2028, so the arrangement is currently at the forward-contract stage, and there have also been reports of local pushback against attracting large data centers.
If NextEra Energy's proposed acquisition of Dominion Energy ($67 billion, May 2026) is completed, it would create the largest regulated utility in the industry and could affect Southern Company's relative competitiveness in capital raising, though regulatory approval remains highly uncertain.
Recent News Timeline
| Date | Event |
|---|---|
| 2026-02-25 | U.S. Department of Energy (DOE) approves $26.54B loan guarantee (largest ever) |
| 2026-04-20 | Quarterly dividend raised to $0.76 (annualized $3.04), 25th consecutive year of increases |
| 2026-04-30 | Q1 2026 earnings released, adjusted EPS $1.32 |
| 2026-05-13 | Annual shareholder meeting; all 12 directors elected |
| 2026-05-28 | Georgia PSC approves fuel cost and storm cost recovery docket (rate decrease) |
| 2026-07-22 | Georgia Power and OpenAI sign 25-year, 3.2GW power supply agreement |
| 2026-07-30 | Q2 2026 earnings released, adjusted EPS $1.13 (revenue below market expectations) |
| 2026-08-03 to 06 | Convertible preferred notes private placement priced and completed (total $2.731B) |
Immediately after the Q2 earnings release on 2026-07-30, the stock fell more than 2% intraday at one point as revenue missed market expectations (Benzinga). As of 2026-08-04, the Georgia PSC is reviewing the Georgia Power-OpenAI agreement, and the outcome of final approval is not available.
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Generated by FomoLog Agent · Data sources: NYSE, SEC EDGAR, company press releases