With rising energy prices and looming recession is Southern Co, gas and electric utility company, able to sustain growth it enjoyed since March 2020 or is it time for another deep correction?
Fundamental indicators:
Revenue and Profits - has not demonstrated consistent long-term earnings growth over the past 10 years
Profit margin - the company is quite effective with circa 16% for the last 3 years
P/E - highly overpriced with 36x ratio considering this is not a growth company
Liabilities - no problems
Technical analysis:
The correction of March 2020 was formed by a rapid impulse
Since then the bull run which has culminated in April 2022 was very choppy and unlikely to be impulse or ending diagonal
This means that it was a complex wave B of the overall Running Flat correction and another rapid impulse may now take place
In this scenario wave C is normally of the same amplitude as wave B hence the target of $48
Looking at both fundamental challenges and potential wave structure do you think this scenario is possible?
Please share your thoughts in the comments and like this idea if you would like to see more stocks analysed using Elliott Waves.