Definitive Analysis
Definitive Analysis

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The Southern Company JR 2017B NT 77 (SOJC)

Company Dividend Discount ModelIndustry: Regulated ElectricSector: Utilities

Valuation Snapshot

Stable Growth$50.18 - $85.02$65.36
Multi-Stage$59.49 - $64.96$62.18
Blended Fair Value$63.77
Current Price$22.72
Upside180.67%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS2.82%4.70%2.662.742.622.502.422.322.192.071.901.77
YoY Growth---2.67%4.40%4.68%3.43%4.47%5.98%5.43%9.32%7.40%4.98%
Dividend Yield--12.37%11.19%10.74%9.89%9.15%9.42%8.75%8.54%7.56%7.04%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)4,459.00
(-) Cash Dividends Paid (M)2,988.00
(=) Cash Retained (M)1,471.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)891.80557.38334.43
Cash Retained (M)1,471.001,471.001,471.00
(-) Cash Required (M)-891.80-557.38-334.43
(=) Excess Retained (M)579.20913.631,136.58
(/) Shares Outstanding (M)1,108.881,108.881,108.88
(=) Excess Retained per Share0.520.821.02
LTM Dividend per Share2.692.692.69
(+) Excess Retained per Share0.520.821.02
(=) Adjusted Dividend3.223.523.72
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate2.53%3.53%4.53%
Fair Value$50.18$65.36$85.02
Upside / Downside120.86%187.68%274.21%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)4,459.004,616.184,778.914,947.375,121.765,302.315,461.38
Payout Ratio67.01%71.61%76.21%80.80%85.40%90.00%92.50%
Projected Dividends (M)2,988.003,305.583,641.833,997.684,374.094,772.085,051.78

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate2.53%3.53%4.53%
Year 1 PV (M)3,000.653,029.913,059.18
Year 2 PV (M)3,000.923,059.753,119.15
Year 3 PV (M)2,990.283,078.633,168.71
Year 4 PV (M)2,970.023,087.603,208.64
Year 5 PV (M)2,941.353,087.623,239.65
PV of Terminal Value (M)51,061.7153,600.9756,240.26
Equity Value (M)65,964.9368,944.4972,035.59
Shares Outstanding (M)1,108.881,108.881,108.88
Fair Value$59.49$62.18$64.96
Upside / Downside161.83%173.66%185.93%

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