Southern Company (SO) — Q3 2026 Earnings Preview
Key Preview Takeaways
| Factor | Details & What to Watch For |
|---|---|
| Consensus Q3 2026 EPS | $1.57 (GAAP, consensus); compare to Q3 2025 actual $1.55 (GAAP) and $1.60 (adjusted) |
| Consensus Q3 2026 Revenue | $8,239M; compare to Q3 2025 actual $7,823M (+5.3% YoY expected) |
| Guidance for FY 2026 | Adjusted EPS: $4.50–$4.60; management expects full-year at or near top end |
| Q2 2026 Performance | Strong: Adj. EPS $1.13 (+23% YoY), revenue flat YoY, but strong customer growth and data center demand |
| Growth Drivers | Data center and large-load contracts (notably OpenAI, Alabama Power deals), robust Southeast economic dev. |
| Rate Stability | Base rates held stable in AL and GA until at least 2029; focus on rate stability and customer benefits |
| Capex/Equity Needs | $81B 5-yr capex plan; remaining equity need through 2030 now $1.1B, down from $1.8B last quarter |
| Key Risks/Watch Items | Execution on new generation, regulatory outcomes for RFPs, pace of contract signings, supply chain tightness |
Q3 2026 Preview Table — Consensus vs. Prior Year Actuals
| Metric | Q3 2026E (Consensus) | Q3 2025 Actual | YoY Change | Notes |
|---|---|---|---|---|
| Revenue ($M) | 8,239 | 7,823 | +5.3% | Consensus vs. reported |
| EPS (GAAP) | 1.57 | 1.55 | +1.3% | Consensus vs. reported |
| EPS (Adjusted) | 1.60 | No consensus for adjusted; prior actual | ||
| EBITDA ($M) | 4,264 | Consensus only | ||
| Net Income ($M) | 1,873 | 1,711 | +9.5% | Consensus vs. reported |
FY 2026 Guidance Table (as of Q2 2026)
| Metric | Guidance (FY 2026) | Context/Notes |
|---|---|---|
| Adjusted EPS | $4.50–$4.60 | Management expects "at or near the top" of range |
| Revenue | No explicit revenue guidance | |
| Capex (5-yr plan) | $81B | 95% state-regulated utilities; up $18B YoY |
| Equity Need (to 2030) | $1.1B | Down from $1.8B last quarter; proactive ATM/convertible issuance |
| FFO/Debt Target | 17% by 2029 | On track; DOE loans reduce capital market needs |
Q3 2025 Actuals Recap
| Metric | Q3 2025 Actual | YoY Change (vs. Q3 2024) | Notes |
|---|---|---|---|
| Revenue ($M) | 7,823 | +7.5% | |
| EPS (GAAP) | 1.55 | +0.15 | |
| EPS (Adjusted) | 1.60 | +0.17 | |
| Net Income ($M) | 1,711 | +11.5% | |
| Adj. Net Income ($M) | 1,766 | +12.9% | Excludes items per company definition |
Q2 2026 Results — Most Recent Quarter
| Metric | Q2 2026 Actual | Q2 2025 Actual | YoY Change | Notes |
|---|---|---|---|---|
| Revenue ($M) | 6,977 | 6,973 | +0.1% | Flat, but strong customer growth |
| EPS (GAAP) | 1.03 | 0.80 | +28.8% | |
| EPS (Adjusted) | 1.13 | 0.92 | +22.8% | |
| Net Income ($M) | 1,174 | 880 | +33.4% | |
| Adj. Net Income ($M) | 1,289 | 1,014 | +27.1% |
What to Watch for in Q3 2026
1. Execution on Large-Load Contracts
- Management highlighted 6 GW of new contracts in Q2 (OpenAI, Alabama Power), bringing total contracted large-load agreements to over 17 GW by mid-2030s.
- Watch for further contract signings, ramp rates, and conversion of late-stage pipeline (8 GW in late stage, 3 GW expected to finalize soon).
2. Retail Sales Growth and Data Center Demand
- Q2 2026: Weather-normal retail sales +2.3% YoY (highest in nearly 20 years).
- Data center usage up 55% YoY in Q2, now >1.2 GW system-wide.
- Monitor continued acceleration in commercial/data center load and impact on overall sales.
3. Rate Stability and Regulatory Developments
- Base rates in Georgia and Alabama held stable until at least 2029.
- Management continues to emphasize rate stability as a key differentiator.
- Ongoing RFPs in Georgia and Alabama for new generation (2–6 GW each, in-service early 2030s); watch for updates on approvals, timing, and incremental capex.
4. Capital Plan and Financing
- $81B 5-year capex plan, with potential for further upside as more contracts are signed and RFPs are awarded.
- Remaining equity need through 2030 now $1.1B (down from $1.8B last quarter), reflecting proactive ATM and convertible issuances.
- DOE loan agreements ($26.5B) expected to generate $7B in customer savings over 30 years and reduce capital market needs.
5. Southern Power Repricing and Growth
- Existing tolling agreements rolling off; management sees opportunity to reprice at 2–3x current rates.
- Ongoing conversations with hyperscalers and other counterparties for both recontracting and new build/brownfield opportunities.
- Watch for updates on 400 MW of announced uprates (late-stage contracting) and potential for another 300 MW.
6. Risks and Supply Chain
- Management notes supply chain tightness (turbines, labor, transformers), but claims strong positioning due to scale and relationships.
- Any delays or cost overruns in generation build-out could impact guidance trajectory.
How Did They Report Last Year? Are Comps Tough?
- Q3 2025 was a strong quarter: Revenue +7.5% YoY, Adj. EPS +12% YoY, driven by higher utility revenues, customer growth, and increased usage.
- Q3 2026 faces a moderately tough comp, but consensus expects continued growth (+5.3% revenue, +1.3% EPS YoY).
- The company is coming off a period of accelerating growth, especially in data center/commercial load, so the bar is high for continued outperformance.
Summary and Conclusions
- Expectations are high: Management has consistently delivered at or above the top end of guidance, and consensus expects another solid quarter.
- Key focus areas: Execution on large-load contracts, continued data center/commercial load growth, and progress on new generation and infrastructure.
- Guidance trajectory: Management expects to be at or near the top of FY 2026 adjusted EPS guidance ($4.50–$4.60), with a long-term 8% EPS CAGR target through 2028 and 7–8% through 2030.
- Risks: Execution on capex, regulatory approvals, and supply chain constraints remain watch items, but management expresses confidence in their ability to deliver.
- Bottom line: Investors should look for confirmation of continued contract wins, sales growth, and disciplined capex/equity management, as well as any updates on regulatory proceedings and RFP outcomes that could drive further upside or risk to the outlook.
