The Southern Company (SO): These Four Numbers Prove Who Is The Best In This Industry

I don’t like to assume that analysts are correct about future growth rates, so I always try to check current earnings to see if their assertions make sense. One way to measure the organic growth of any utility is by their revenue growth. In the current quarter, Southern Co reported an 8.1% increase in revenue. The only one of their peers to report better revenue growth was Exelon, but that had more to do with Exelon’s prior year quarter being so bad, rather than organic growth. If you look at Duke’s negative growth, or Consolidated Edison’s 3.44% revenue growth, you can see that Southern Co is the best of the bunch.

Last but not least, The Southern Company (NYSE:SO) is growing their cash flow as well. In fact, if you look at what I call core operating cash flow (net income + depreciation), Southern Co is growing faster than any of their peers. On a year-over-year basis, the company grew operating cash flow by 33.7%. The only company to come close to this performance was Duke, with a 24.11% increase, but keep in mind Duke had the benefit of the Progress Energy merger. Exelon’s operating cash flow grew by about 4.3%, and Consolidated Edison actually saw a decline of 13.65%.

Buy The Best, Forget The Rest
As you can see, whether we look at dividend yield, earnings growth, revenue growth, or cash flow growth, Southern Co tops them all. Investors looking for a good yield with reasonable growth should look no further. I’m not suggesting there isn’t risk in buying Southern Co at these levels. It’s possible that higher interest rates would make the stock less attractive.

For investors that want exposure to the utilities industry, this should be very simple. The Southern Company (NYSE:SO) should be the first company on your watch list, everyone else should come in second. After all, that seems to be the theme, Southern Co is the best so just forget the rest.

The article These 4 Numbers Prove Who Is The Best In This Industry originally appeared on Fool.com and is written by Chad Henage.

Chad Henage has no position in any stocks mentioned. The Motley Fool recommends Exelon and Southern Company. Chad is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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