SCANA (SCG) vs. Southern (SO) Critical Analysis

SCANA (NYSE: SCG) and Southern (NYSE:SO) are both mid-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.

Dividends

SCANA pays an annual dividend of $2.45 per share and has a dividend yield of 5.4%. Southern pays an annual dividend of $2.32 per share and has a dividend yield of 4.5%. SCANA pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southern pays out 414.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SCANA has raised its dividend for 17 consecutive years and Southern has raised its dividend for 15 consecutive years. SCANA is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

SCANA has a beta of 0.2, indicating that its stock price is 80% less volatile than the S&P 500. Comparatively, Southern has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500.

Institutional and Insider Ownership

66.8% of SCANA shares are held by institutional investors. Comparatively, 53.8% of Southern shares are held by institutional investors. 0.4% of SCANA shares are held by company insiders. Comparatively, 1.0% of Southern shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for SCANA and Southern, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SCANA 2 6 2 0 2.00
Southern 3 5 8 0 2.31

SCANA presently has a consensus target price of $59.21, suggesting a potential upside of 29.35%. Southern has a consensus target price of $49.41, suggesting a potential downside of 3.23%. Given SCANA’s higher possible upside, equities analysts clearly believe SCANA is more favorable than Southern.

Profitability

This table compares SCANA and Southern’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SCANA 10.45% 10.05% 3.05%
Southern 2.59% 10.81% 2.50%

Earnings & Valuation

This table compares SCANA and Southern’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SCANA $4.23 billion 1.54 $595.00 million $3.16 14.49
Southern $19.90 billion 2.58 $2.49 billion $0.56 91.18

Southern has higher revenue and earnings than SCANA. SCANA is trading at a lower price-to-earnings ratio than Southern, indicating that it is currently the more affordable of the two stocks.

Summary

SCANA beats Southern on 9 of the 17 factors compared between the two stocks.

About SCANA

SCANA Corporation is a holding company. The Company, through its subsidiaries, is engaged in the generation, transmission, distribution and sale of electricity in South Carolina. The Company operates through segments, including Electric Operations, Gas Distribution, Gas Marketing and All Other. The Company is engaged in the purchase, transmission and sale of natural gas in North Carolina and South Carolina. The Electric Operations segment generates, transmits and distributes electricity. The Company’s regulated businesses include subsidiaries, such as South Carolina Electric & Gas Company (SCE&G), South Carolina Fuel Company, Inc. (Fuel Company), South Carolina Generating Company, Inc. (GENCO) and Public Service Company of North Carolina, Incorporated (PSNC Energy). The Company’s nonregulated businesses include subsidiaries, such as SCANA Energy Marketing, Inc. (SCANA Energy), ServiceCare, Inc., SCANA Services, Inc. and SCANA Corporate Security Services, Inc.

About Southern

The Southern Company (Southern Company) is a holding company. The Company owns all of the stock of the traditional electric operating companies and the parent entities of Southern Power Company (Southern Power) and Southern Company Gas, and owns other direct and indirect subsidiaries. The Company’s segments include Gas distribution operations, Gas marketing services, Wholesale gas services, Gas midstream operations and All other. The Gas distribution operations segment includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. The Gas marketing services segment provides natural gas commodity and related services to customers markets that provide for customer choice. The Wholesale gas services segment engages in natural gas storage and gas pipeline arbitrage. The Gas midstream operations consist primarily of gas pipeline investments, with storage and fuels.

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