SO Stock Today: December 29 — Report Flags Alabama Power Ash Risks
Alabama Power is in focus after a new report on unlined coal ash ponds at Plant Barry raised breach and groundwater risks that could affect parent Southern Company (SO). Investors are weighing cleanup capex, possible ash recycling, and how much cost recovery regulators may allow in 2026. SO last traded at $87.54, with a 21.8x P/E and a 3.37% dividend yield, while the Street’s consensus target sits near $93.22. We break down what this means for cash flow, valuation, and key 2026 catalysts.
What the report says about ash risks
A recent investigation highlights unlined coal ash ponds at Alabama Power’s Plant Barry near the Mobile‑Tensaw Delta, citing flood and contamination risks to nearby waterways. The piece warns that a breach or overtopping event could spread ash waste into sensitive ecosystems and drinking water sources. See coverage from Inside Climate News for context and local voices raising alarms about long‑standing disposal practices.
The report also points to oversight questions under federal coal ash rules and Alabama’s implementation. Environmental groups argue that ash in areas prone to flooding should be moved to lined facilities. Local media note that ponds could flood during extreme weather, threatening rivers and wetlands. See summary reporting here: Report warns Alabama Power coal ash ponds could flood Alabama waterways. Potential enforcement or litigation would add timelines and costs.
Financial impact scenarios for Southern Company
Possible responses include excavating ash to lined landfills, on‑site consolidation with liners, or recycling into cement and concrete. Each path drives different capex and schedules. Southern Company’s free cash flow per share is negative at -$1.81, while capex to revenue is 0.39, underscoring limited internal funding flexibility. If Alabama Power must accelerate removal, investors should expect updated capex guidance and clearer schedules before valuing the total bill.
Funding choices matter. Debt to equity stands at 1.89 and interest coverage is 2.46, leaving some room but not much for large, sudden projects. The dividend yield is 3.37% with a 67% payout ratio. Alabama Power cost programs that lift rate base could help longer term, but near term funding could lean on debt, affecting leverage and, potentially, future dividend growth pacing.
Rate recovery and regulatory timeline
Utilities often seek to recover prudent environmental compliance costs. Management could pursue recovery for Alabama Power through future filings expected around 2026. Outcomes will depend on the scope regulators approve, whether removal or recycling is required, and how timelines are staged. Staggered programs can smooth bills. Investors should watch pre‑filing signals, test runs, and stakeholder input to gauge the path of allowed returns and recovery pace.
Legal challenges or consent orders can extend timelines and lift carrying costs. Alabama Power faces higher scrutiny, which can widen the company’s risk premium until plans firm up. ESG‑focused funds may hold off until there is clarity on excavation, liners, or recycling. Clear milestones, third‑party verification, and transparent water testing can help sentiment, even before the 2026 rate recovery window opens.
What SO’s chart and valuation signal
SO trades at $87.54, below its 50‑day and 200‑day averages of $90.34 and $91.46. RSI is 47.63, a neutral read. ADX at 30 suggests a strong trend, while the MACD histogram of 0.39 hints at improving momentum. Bollinger Bands show the middle at $86.64 and lower at $83.28. Together, these mark nearby support and a cautious, range‑bound setup.
Street targets average $93.22, with a median of $95.50, high of $107, and low of $70. Ratings are mixed: 7 Buy, 6 Hold, 4 Sell. The P/E is 21.8 with a 3.37% yield. Model forecasts imply about $94.99 over the next year and $116.64 in three years. Key swing factors remain Plant Barry liabilities, timing of recovery, and any litigation setbacks.
Final Thoughts
Key takeaways for investors: the report increases focus on Alabama Power’s unlined coal ash ponds, especially at Plant Barry. The range of cleanup options implies different capex paths and schedules, so watch for management updates, permits, and any federal or state directives. The 2026 recovery window is the next big milestone. On fundamentals, leverage and coverage are adequate but not loose, which tempers room for large, rapid spend. On the tape, SO trades near its Bollinger midline with mixed momentum and a fair yield. Upcoming catalysts include regulatory filings, any legal developments, capex disclosures, and the next earnings date on February 12, 2026. We would size positions with these known unknowns in mind and keep an eye on support around the mid to low $80s.
FAQs
The report focuses on unlined coal ash ponds near sensitive waterways. In a flood or breach, ash can enter rivers and wetlands, raising water quality and cleanup concerns. Regulators could require liners, excavation, or recycling, which would shape timelines, capex needs, and how much cost recovery the utility can seek from customers.
Large ash removal or lining programs can lift capex and carrying costs, pressuring near‑term free cash flow. Over time, if regulators grant recovery, rate base can grow and support earnings. The key variables are project scope, phasing, and allowed returns. Clear guidance on Alabama Power’s plan will help model earnings impact by year.
Utilities typically seek recovery for prudent environmental compliance costs. Approval is not automatic. Commissions assess options, timelines, and customer bill impacts. For Alabama Power, 2026 filings could be a key step. Evidence of least‑cost solutions, recycling where feasible, and strong monitoring could improve chances and smooth the recovery schedule.
SO offers a 3.37% dividend yield and mixed ratings, with targets centered near $93. The chart is range‑bound with support around the mid $80s. Upside depends on visibility for Alabama Power’s plan, recovery timing, and litigation risk. Position sizing and patience make sense while awaiting regulatory milestones and clearer capex details.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
