For questions about this article or underlying research, email help@trefis.com.
Shareholders of two electric utilities have seen very different results. Over the five years to October 2026, one stock returned 153.0% and the other returned 77.6%. The better performer of the two is Entergy Corporation (ETR), followed by Southern Company (SO). Take a guess: did Entergy’s lead come from faster sales growth, faster profit growth, or investors paying more for each dollar of profit?
Image from Pixabay
Who Has Beaten Southern Over Five Years?
Southern has done well against most of its industry, beating 19 of the 23 electric utilities it was compared with over those five years. Yet two utilities whose yearly sales growth over the last three years came within four points of Southern’s did better still, with Entergy finishing 75.4 points ahead.
Company Sales growth, 3-year average P/E 1-year 3-year 5-year Southern (SO) 3.1% 22.6x 0.3% 54.4% 77.6% Entergy (ETR) 0.7% 27.4x 14.1% 161.6% 153.0% Vistra (VST) 6.7% 22.3x -26.0% 369.9% 712.8%
Total return to 2026-10-27, including dividends. Companies in Electric Utilities whose sales grew within 4 points of SO’s. P/E: latest close over the last four quarters’ earnings per share.
Vistra Corp. (VST) finished even further ahead, beating Southern by 635.3 points. Vistra was losing money in 2021, but Entergy and Southern both posted a profit in 2021 and 2026.
Did Entergy Grow Faster Than Southern?
No. Southern outpaced Entergy in average annual sales growth over the last three years, logging 3.1% against Entergy’s 0.7%. Between the twelve months to June 2021 and the twelve months to June 2026, Southern’s revenue rose 38.1%, while Entergy’s revenue rose 23.2%. Southern grew its sales faster on both measures, so faster sales did not give Entergy its lead. Entergy’s share count, however, rose 16.1%, compared to a 6.9% increase for Southern.
Entergy generates and sells electricity in Arkansas, Louisiana, Mississippi, and Texas, and it also distributes natural gas. Southern operates a similar model, running electric utilities alongside Southern Company Gas.
Where Did The Gap Come From?
The advantage did not come from profit per share. Southern grew its earnings per share by 40.2% between 2021 and 2026, beating Entergy’s 26.8% increase. Entergy widened its operating margin by 5.2 points, compared to 2.3 points for Southern, but Entergy’s profit was spread over more shares by 2026.
The difference lies in what investors pay. Entergy stock traded at 15.9 times earnings in 2021, and today it trades at 27.4 times. Southern’s multiple went from 20.3 times in 2021 to 22.6 times today. Southern posted faster growth in both sales and profit per share, so Entergy’s lead came from the multiple. Investors now pay far more for each dollar of Entergy’s profit than they did in 2021.
Southern draws most of its revenue from its electric utilities, which generated 74.6% of revenue in fiscal 2025. Data centers are using more of that power. On the July 30, 2026 call, management said data center usage in fiscal Q2 2026 was 55% higher than a year earlier. Management also said interest expense from higher debt balances and dilution from additional shares outstanding partly offset that quarter’s higher earnings.
What To Watch In Southern’s Next Report
On the same call, management said Southern’s adjusted earnings per share for the first half of 2026 were well above its expectations. Management now expects full-year 2026 adjusted earnings near or at the top of its guidance range, a forecast rather than a result.
Southern’s multiple is priced on its earnings per share. That figure is the one to watch in the fiscal Q3 2026 report, expected in November 2026.
How To Act On SO?
Not necessarily on Southern alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. Here are two companies from Southern’s own industry that have beaten it. Over the five years to October 2026, Entergy stock rose 153.0% and Vistra stock rose 713%, while Southern stock rose 77.6%.
Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.
Spot an error or want more like this? Tell us in 10 seconds.
Source: www.trefis.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
