SO

Southern is a large, regulated electric-and-gas holding company (Alabama, Georgia, and Mississippi Power plus Southern Power and Southern Company Gas), and the FY2025 numbers show the classic strengths of that model: revenue grew 10.6% to $29.6B, margins are stable and healthy (operating 24.7%, net 14.7%), and ROE is a respectable 12.1%. As the MD&A makes clear, profitability is 'largely dependent on their ability, through the rates that they are permitted to charge, to recover their costs and earn a reasonable rate of return' — which is exactly why the earnings stream is durable and defensive.

The catch is per-share economics. Despite double-digit revenue growth, diluted EPS fell 1.8% to $3.92 and net income slipped 1.4%, as a 2.1% increase in share count and a 14.5% jump in D&A absorbed the operating gains. Capex surged 42% to $12.7B, well above the flat $9.80B of operating cash flow, so free cash flow is roughly negative $2.9B; layer on $3.02B of dividends and the funding gap is plugged with debt and equity issuance, on a balance sheet already levered at 3.24x liabilities/equity. That is the standard utility playbook — borrow to build rate base, recover through rates — but it makes the stock dependent on supportive regulators and steady access to capital.