SO
Southern Co
Price:  
85.57 
USD
Volume:  
7,040,705.00
United States | Electric Utilities
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

SO WACC - Weighted Average Cost of Capital

The WACC of Southern Co (SO) is 5.4%.

The Cost of Equity of Southern Co (SO) is 6.35%.
The Cost of Debt of Southern Co (SO) is 4.45%.

Range Selected
Cost of equity 5.60% - 7.10% 6.35%
Tax rate 11.30% - 14.30% 12.80%
Cost of debt 4.00% - 4.90% 4.45%
WACC 4.8% - 6.0% 5.4%
WACC

SO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.37 0.41
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.60% 7.10%
Tax rate 11.30% 14.30%
Debt/Equity ratio 0.65 0.65
Cost of debt 4.00% 4.90%
After-tax WACC 4.8% 6.0%
Selected WACC 5.4%

SO's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for SO:

cost_of_equity (6.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.37) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.