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The Southern Company (SO) — WACC Analysis

WACC Breakdown

The Southern Company (SO) has a weighted average cost of capital (WACC) of 5.6%. The cost of equity is 6.8%, derived from a beta of 0.23 and a risk-free rate of 4.7%. The after-tax cost of debt is 3.9%. The capital structure is 60.4% equity and 39.6% debt.

Interpretation

A WACC of 5.6% suggests that the market views The Southern Company as relatively low-risk, with a lower cost of financing.

Investors can compare SO's WACC of 5.6% against industry peers to gauge its relative financing costs. A beta of 0.23 reflects the stock's volatility relative to the broader market.

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VALUATION

SO WACC: 5.64% for The Southern Company

Current inputs imply a 6.80% cost of equity and a 4.92% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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[02]
WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

The Southern Company Common Stock (SO) WACC Results
Weighted Average Cost of Capital
5.64%
Cost of Equity
6.80%
Risk-Free Rate4.74%
Beta0.23
Market Risk Premium4.23%
Cost of Debt
3.88%
Pre-Tax Cost of Debt4.92%
Tax Rate21.00%
Tax Shield1.03%
Capital Structure
Equity: 60.38%($102.31B)
Debt: 39.62%($67.15B)
Equity Component
4.10%
60.38% × 6.80%
Debt Component
1.54%
39.62% × 3.88%

The Southern Company (SO) WACC in context

The Southern Company (SO) currently screens with an estimated WACC of 5.64%. That blends a 6.80% cost of equity, a 4.92% pre-tax cost of debt, and a 60.38% equity weight into the discount rate you would typically use in a DCF model.

screens as a relatively low discount rate, which usually supports higher DCF values.

What SO WACC implies

A 5.64% discount rate screens as a relatively low discount rate, which usually supports higher DCF values.

How this page calculates SO

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 0.23 and equity accounts for 60.38% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.